Archive for June, 2009
Your credit score is a numerical gauge of your ability to payback loans. Anytime you want to borrow money or get credit, the lender will look up this score to determine the risk involved in lending to you. The higher the score the better, so if you get a credit report and see a high score that means your credit is good, right?
Not necessarily so. The fact is there are several different credit scoring methods. Credit scores calculated from the same credit reports can differ substantially from credit scoring method to credit scoring method. So how can you ever know what your credit score really is? Well, luckily, 75% percent of lenders use FICO scores exclusively and you can purchase FICO scores yourself–you just have to know where to go.
FICO credit scoring was developed by Fair Isaac and Company as a numerical method of determining your credit worthiness. The scores range between 300 and 850 and are basically based on your past bill paying performance.
It would be easy if everyone used this scoring system, but the three major credit bureaus each have their own version of the FICO score: Equifax uses the Beacon system, TransUnion uses the Empirica system, and Experian uses the Experian/Fair Isaac system.
Althought they all use slightly different systems, all systems are based on the original FICO scoring method so generally your score should be equivalent from each. Of course, some lenders may also use their own scoring methods as well.
There is only one place where you can get your FICO score from all three bureaus and that is at www.myfico.com. If you order your credit score from anywhere else, again be aware that these scores are “FAKOs” (or “fake”) and can differ considerably from your FICO credit scores.
Adding to the confusion is the credit bureaus themselves. Recently, Experian revealed that the national average credit score of its consumers is 678. This is very misleading to the average consumer. When you buy your credit report and score directly from Experians website, you are getting what they call the “PLUS Score,” which is NOT a FICO score, and is NOT used by lenders anywhere. (Equifax is the exception–you can buy your FICO score directly from them at their website; however, the only place to get all three scores together is at www.myfico.com.) The 678 PLUS Score reported by Experian is actually the average of consumers’ PLUS Scores, not their FICO Scores.
Clearly, the PLUS Score (and all Non-FICO scores) are useless. Not only that, but such hype misleads consumers into purchasing their PLUS Score thinking that they are getting the same credit score that their lender will use. Non-FICO scores are worthless not matter what the credit bureaus or any website selling non-FICO scores claim. Even a few points difference in your credit score can mean confronting the reality of the loss of thousands of dollars out of your pocket–a loss that you probably didn’t plan for. The next time you want the most accurate credit score available, do yourself a favor and get the industry standard: the FICO credit score.
By: Lee Dobbins
About the Author:
Not necessarily so. The fact is there are several different credit scoring methods. Credit scores calculated from the same credit reports can differ substantially from credit scoring method to credit scoring method. So how can you ever know what your credit score really is? Well, luckily, 75% percent of lenders use FICO scores exclusively and you can purchase FICO scores yourself–you just have to know where to go.
FICO credit scoring was developed by Fair Isaac and Company as a numerical method of determining your credit worthiness. The scores range between 300 and 850 and are basically based on your past bill paying performance.
It would be easy if everyone used this scoring system, but the three major credit bureaus each have their own version of the FICO score: Equifax uses the Beacon system, TransUnion uses the Empirica system, and Experian uses the Experian/Fair Isaac system.
Althought they all use slightly different systems, all systems are based on the original FICO scoring method so generally your score should be equivalent from each. Of course, some lenders may also use their own scoring methods as well.
There is only one place where you can get your FICO score from all three bureaus and that is at www.myfico.com. If you order your credit score from anywhere else, again be aware that these scores are “FAKOs” (or “fake”) and can differ considerably from your FICO credit scores.
Adding to the confusion is the credit bureaus themselves. Recently, Experian revealed that the national average credit score of its consumers is 678. This is very misleading to the average consumer. When you buy your credit report and score directly from Experians website, you are getting what they call the “PLUS Score,” which is NOT a FICO score, and is NOT used by lenders anywhere. (Equifax is the exception–you can buy your FICO score directly from them at their website; however, the only place to get all three scores together is at www.myfico.com.) The 678 PLUS Score reported by Experian is actually the average of consumers’ PLUS Scores, not their FICO Scores.
Clearly, the PLUS Score (and all Non-FICO scores) are useless. Not only that, but such hype misleads consumers into purchasing their PLUS Score thinking that they are getting the same credit score that their lender will use. Non-FICO scores are worthless not matter what the credit bureaus or any website selling non-FICO scores claim. Even a few points difference in your credit score can mean confronting the reality of the loss of thousands of dollars out of your pocket–a loss that you probably didn’t plan for. The next time you want the most accurate credit score available, do yourself a favor and get the industry standard: the FICO credit score.
By: Lee Dobbins
About the Author:
Find out how to repair your credit with this
free credit repair report.
Lee Dobbins is a freelance writer and enjoys writing about many topics including debt and credit repair.
free credit repair report.
Lee Dobbins is a freelance writer and enjoys writing about many topics including debt and credit repair.
Merry Bogucki
The factors on your credit report that are used to determine your credit score are broken down into 5 categories, each with it’s own weight on the equation.
1. payment history (35%)
2. amounts owed (30%)
3. length of credit history (15%)
4. new credit (10%)
5. types of credit used (10%)
Payment History
One of the primary reasons that the credit scoring system was developed and why lenders still use it is to determine the likelihood that they will be repaid the money you borrow. Therefore, it makes sense that your payment history would be a mjor factor in your credit score. This aspect is affected negatively by late payments, accounts sent to collections, and bankruptcies. The more recently any of these have occured, the larger the effect on your score.
Amounts Owed
Outstanding debt is the next most important measure of your ability to pay back your obligations. Having credit cards, owning a home or car, or going to college means you probably have some debt on your record, which is okay. However, this part of your score can be affected by maxing out credit cards, or leaving them open with no activity. To quickly raise your credit score, pay off credit cards with the highest interest rate or where you have late payments first. It is good practice to keep credit cards at 25% of less of their balance.
Length of Credit History
The length of your credit history is based on the oldest account in your credit file. For many people this is their first credit card, a student loan, or possibly a car loan or mortgage. The shorter your credit history, the bigger the risk you represent to lenders. You should also be aware, however, that as your credit history gets longer and you have more accounts opening and closing, you are also at a greater risk for having misinformation added to your report.
New Credit
10 percent of the score is based on new credit. Typically your score will go down for awhile after you have opened up a new line of credit. The major factor of this percentage comes from inquiries. There are two types of inquiries; soft and hard. A soft inquiry does not affect the credit score and usually involves a quick glance at your score. A hard inquiry does lower your credit score and typically is a result of actions initiated by you in an effort to obtain credit. If you open 2 new credit card accounts, take out a private bank loan, and attempt to buy a new car, your score will go down…the good thing is that your score will rebound from these inquiries.
New Credit
Hard inquiries do affect your score, and lower it by a number of points for each inquiry. Hard inquiries are generally the result of you pursuing new credit opportunities. This is mostly a defense against you obtaining a good credit score and opening 100 new credit accounts all at once. After 10 inquires or so your score would be significantly lowered to the point where lenders would begin to reconsider your credit. The good news is that hard inquiries do not affect your credit for very long, and your score will return to normal after they expire.
Types of Credit Used
The final part of your score is based on the types of credit accounts you have. These include:
1. Revolving (credit cards, lines of credit, HELOC)
2. Loans
3. Public Records (bankruptcy, liens)
4. Collections
Some types of accounts can really help you score as long as you are paying them on time such as a student loan, car loan, mortgage, and credit cards. If you have ever had a public records such as a bankruptcy, tax lien, or a collection, your credit score is going to be negatively affected. Beware of companies that claim that they can remove a bankruptcy or a collection off your credit report. These items will eventually not be detrimental to your credit score so time often is the best answer for dealing with these actions in your credit history.
Some of the account types can contribute positively to your credit score as long as they are paid on time. For instance, student loans, home mortgages, or credit cards, if paid on time, can create very healthy credit. However, accounts like tax liens, collections, or bankruptcy will affect your credit negatively. If you have any of this second type of account on your record and you know it is inaccurate or fraudulent it is a good idea to contact a credit repair specialist to have it removed.
The bottom line in understanding your score is that lenders want to loan to people who know how use credit responsibly. After all, lenders only make money when people use credit, and when they pay it back. Therefore, if your credit history reflects that you make proper use of credit and pay back your obligations, your score will reflect this to lenders.
By: Ryan J Bell
About the Author:
1. payment history (35%)
2. amounts owed (30%)
3. length of credit history (15%)
4. new credit (10%)
5. types of credit used (10%)
Payment History
One of the primary reasons that the credit scoring system was developed and why lenders still use it is to determine the likelihood that they will be repaid the money you borrow. Therefore, it makes sense that your payment history would be a mjor factor in your credit score. This aspect is affected negatively by late payments, accounts sent to collections, and bankruptcies. The more recently any of these have occured, the larger the effect on your score.
Amounts Owed
Outstanding debt is the next most important measure of your ability to pay back your obligations. Having credit cards, owning a home or car, or going to college means you probably have some debt on your record, which is okay. However, this part of your score can be affected by maxing out credit cards, or leaving them open with no activity. To quickly raise your credit score, pay off credit cards with the highest interest rate or where you have late payments first. It is good practice to keep credit cards at 25% of less of their balance.
Length of Credit History
The length of your credit history is based on the oldest account in your credit file. For many people this is their first credit card, a student loan, or possibly a car loan or mortgage. The shorter your credit history, the bigger the risk you represent to lenders. You should also be aware, however, that as your credit history gets longer and you have more accounts opening and closing, you are also at a greater risk for having misinformation added to your report.
New Credit
10 percent of the score is based on new credit. Typically your score will go down for awhile after you have opened up a new line of credit. The major factor of this percentage comes from inquiries. There are two types of inquiries; soft and hard. A soft inquiry does not affect the credit score and usually involves a quick glance at your score. A hard inquiry does lower your credit score and typically is a result of actions initiated by you in an effort to obtain credit. If you open 2 new credit card accounts, take out a private bank loan, and attempt to buy a new car, your score will go down…the good thing is that your score will rebound from these inquiries.
New Credit
Hard inquiries do affect your score, and lower it by a number of points for each inquiry. Hard inquiries are generally the result of you pursuing new credit opportunities. This is mostly a defense against you obtaining a good credit score and opening 100 new credit accounts all at once. After 10 inquires or so your score would be significantly lowered to the point where lenders would begin to reconsider your credit. The good news is that hard inquiries do not affect your credit for very long, and your score will return to normal after they expire.
Types of Credit Used
The final part of your score is based on the types of credit accounts you have. These include:
1. Revolving (credit cards, lines of credit, HELOC)
2. Loans
3. Public Records (bankruptcy, liens)
4. Collections
Some types of accounts can really help you score as long as you are paying them on time such as a student loan, car loan, mortgage, and credit cards. If you have ever had a public records such as a bankruptcy, tax lien, or a collection, your credit score is going to be negatively affected. Beware of companies that claim that they can remove a bankruptcy or a collection off your credit report. These items will eventually not be detrimental to your credit score so time often is the best answer for dealing with these actions in your credit history.
Some of the account types can contribute positively to your credit score as long as they are paid on time. For instance, student loans, home mortgages, or credit cards, if paid on time, can create very healthy credit. However, accounts like tax liens, collections, or bankruptcy will affect your credit negatively. If you have any of this second type of account on your record and you know it is inaccurate or fraudulent it is a good idea to contact a credit repair specialist to have it removed.
The bottom line in understanding your score is that lenders want to loan to people who know how use credit responsibly. After all, lenders only make money when people use credit, and when they pay it back. Therefore, if your credit history reflects that you make proper use of credit and pay back your obligations, your score will reflect this to lenders.
By: Ryan J Bell
About the Author:
Veracity Credit Consultants, a leading provider of credit score repair has provided this article. Check them out online at http://www.VeracityCredit.com
Maynard Brignac
niebuhrian asked:
I have 3 credit cards (2 MasterCards and 1 retailer card). I pay off my balances monthly and therefore have no debt. One MasterCard has a credit limit of around $18,000 and the other has a limit of $19,000. The retail credit card (which I have only used once) has a limit of $12,000. As stated before, I have a zero balance on all of the cards and pay them off every month. How do these high limits affect my credit score. Currently, I rent and have no desire to buy a house until the market settles some in my area. Any thoughts?
Tom
I have 3 credit cards (2 MasterCards and 1 retailer card). I pay off my balances monthly and therefore have no debt. One MasterCard has a credit limit of around $18,000 and the other has a limit of $19,000. The retail credit card (which I have only used once) has a limit of $12,000. As stated before, I have a zero balance on all of the cards and pay them off every month. How do these high limits affect my credit score. Currently, I rent and have no desire to buy a house until the market settles some in my area. Any thoughts?
Tom
bankruptcyattorney asked:
Bankruptcy Attorney Jamie Ryke of the Law Offices of Second Start explains what happens to your credit score when you file for Chapter 7 or Chapter 13 bankruptcies.
Shalanda Edward
tau.reanb asked:
I fell behind on my student loan payments and it hurt my credit score pretty badly. However, I will soon be caught up thanks to a forbearance.
I fell behind on my student loan payments and it hurt my credit score pretty badly. However, I will soon be caught up thanks to a forbearance.
How soon can my score recover? The student loans are the only debts on my credit scores and I have no large credit card debt, car loans, or mortgages. How soon will I be able to bring my creidt score back up?
Dominic Kertis
Are you hesitant to apply for a home loan just because you have a bad credit score? Good credit score is important but if you have bad credit it does not mean the end of the world. You can still get a home loan if you have a bad credit score.
You need to be very careful in your decision at the time of applying for the loan. Do not haste for the loan to the first offer you are presented. Many money lenders might try to rip you off just because of a bad credit history. Do not accept whatever they have to offer, look out for other options. There might be a better option waiting just next door.
A good search can help you fund lenders who are willing to provide you loan at a much lower interest rate.
Is credit score important?
Credit score is definitely important. No matter it is just a three digit number but it has great importance in today’s business world. Your credit score directly reflects your credit standings and your capacity to repay the loan. A Bad credit score does’nt makes it impossible to get the home loan but it will certainly affect the interest rate you’ll have to pay.
One of the best ways to improve your credit score before applying for the loan is to do credit score repair. All you have to is get a copy of your credit score from any credit agencies. In fact you need to check your credit score once in six months. The reason for this repair is that there might be certain errors in your credit report. Its quite possible you might have paid your dues but they are not recorded in the credit report. You have to notice all these errors and inform the credit agencies to do the necessary corrections. Remember a credit score repair can help you improve your credit score by quite a margin.
Bad credit score is definitely not the end of the world. Your home loan can still be approved. The only drawback is the high interest rate which could have been way low if you had a good credit score. Improve your credit score with the help of following tips
• Pay your dues on time
• Check your credit score at least once in six months
• Avoid creating multiple accounts. Close all unnecessary accounts. Remember zero balance accounts are also taken into consideration.
Isabella Rodrigues writes for credit-free-score.net,
offering the latest information on credit score, visit them today for more infromation
on credit score..
Visit today: http://www.credit-free-score.net
By: Isabel
About the Author:
You need to be very careful in your decision at the time of applying for the loan. Do not haste for the loan to the first offer you are presented. Many money lenders might try to rip you off just because of a bad credit history. Do not accept whatever they have to offer, look out for other options. There might be a better option waiting just next door.
A good search can help you fund lenders who are willing to provide you loan at a much lower interest rate.
Is credit score important?
Credit score is definitely important. No matter it is just a three digit number but it has great importance in today’s business world. Your credit score directly reflects your credit standings and your capacity to repay the loan. A Bad credit score does’nt makes it impossible to get the home loan but it will certainly affect the interest rate you’ll have to pay.
One of the best ways to improve your credit score before applying for the loan is to do credit score repair. All you have to is get a copy of your credit score from any credit agencies. In fact you need to check your credit score once in six months. The reason for this repair is that there might be certain errors in your credit report. Its quite possible you might have paid your dues but they are not recorded in the credit report. You have to notice all these errors and inform the credit agencies to do the necessary corrections. Remember a credit score repair can help you improve your credit score by quite a margin.
Bad credit score is definitely not the end of the world. Your home loan can still be approved. The only drawback is the high interest rate which could have been way low if you had a good credit score. Improve your credit score with the help of following tips
• Pay your dues on time
• Check your credit score at least once in six months
• Avoid creating multiple accounts. Close all unnecessary accounts. Remember zero balance accounts are also taken into consideration.
Isabella Rodrigues writes for credit-free-score.net,
offering the latest information on credit score, visit them today for more infromation
on credit score..
Visit today: http://www.credit-free-score.net
By: Isabel
About the Author:
Isabella Rodrigues writes for credit-free-score.net,
offering the latest information on credit score, visit them today for more infromation
on credit score..
Visit today: http://www.credit-free-score.net
Brendon Lascody
7brandontube asked:
If you want to get a mortgage loan and buy a home, you’ll need a good credit score. In this video, Brandon Cornett (creator of the Home Buying Institute) explains what you can do to raise your credit score fast.
Leon Jelden
unioncreditdr asked:
There’s no guaranteed way to raise your credit score quickly, but here are some things you can do to help boost your score: 1) Dispute any mistakes you find in your credit report 2) Pay down credit card balances 3) Have strong, positive credit references Union Credit Doctor Gerri Detweiler gives you tips on how and why to employ different strategies for improving your credit score. Learn more about how to get a secured credit card if you’re having tourble qualifying for credit: http …
Lupe Siniscalchi
Your credit score is calculated by using mathematical formulas that analyze your creditworthiness. The formulas consider the amount and types of debt you owe and then analyze and compare your repayment history with thousands of other consumers to determine your credit score.
Credit scores are designed to measure the risk of default by taking into account various factors in a person’s financial history. Although the exact formulas for calculating credit scores are closely guarded secrets by each of the three credit bureaus, the Fair Isaac Corporation has disclosed the components and the approximate weighted contribution of each component.
The factor that has the biggest impact on your score, approximately 35% of your score, is whether you’ve paid past credit accounts on time. However, an overall good credit picture can outweigh a few late payments which will continue to have less impact over time unless the late payment is a mortgage payment.
About 30% of your score is determined on the amount you currently owe lenders. Having credit accounts and owing money doesn’t mean you’re a high-risk borrower. But owing a lot of money on many accounts could mean you are financially overextended and may be more likely to make late payments or none at all. Part of the science of calculating a credit score is determining how much debt is too much for a given credit profile.
A longer credit history will increase your score. The length of your credit history makes up about 15% of your credit score. However, a high score is achievable with a short credit history if the rest of your credit report indicates responsible credit management.
Recent applications for, or newly opened, credit accounts will weigh against the rest of your credit history. This factor makes up about 10% of your score. FICO scores will distinguish between a search for a single loan and a search for many lines of credit, in part by the length of time over which inquiries occur. If you’re seeking a loan, do your rate shopping within a focused period of time, such as 30 days, to avoid lowering your credit score.
Several minor factors also can influence your score. About 10% of your score is acquired from these factors. For example, having a mix of credit types on your credit report – credit cards, installment loans such as a mortgage or auto loan, and personal lines of credit – is normal for people with longer credit histories and can slightly improve their scores.
It’s unlikely that each credit agency would give the same score to the same person since each agency collects their information from different creditors. Even when they collect from the same creditors, they update their records at different times. To get a more accurate picture, lenders pull FICO scores from all three agencies and then base their lending decisions on the middle of the three scores.
As you can see, calculating your credit score is not an exact science but these weighted factors will provide you with a good sense of what impacts your score. It’s important to always monitor your credit score and determine what you can do to maintain a high score. Look for future articles that will help you achieve and maintain a high credit score! For more information about your credit score, check out this site http://GetMoreCreditScore.com/info2.
By: Carey Snow
About the Author:
Credit scores are designed to measure the risk of default by taking into account various factors in a person’s financial history. Although the exact formulas for calculating credit scores are closely guarded secrets by each of the three credit bureaus, the Fair Isaac Corporation has disclosed the components and the approximate weighted contribution of each component.
The factor that has the biggest impact on your score, approximately 35% of your score, is whether you’ve paid past credit accounts on time. However, an overall good credit picture can outweigh a few late payments which will continue to have less impact over time unless the late payment is a mortgage payment.
About 30% of your score is determined on the amount you currently owe lenders. Having credit accounts and owing money doesn’t mean you’re a high-risk borrower. But owing a lot of money on many accounts could mean you are financially overextended and may be more likely to make late payments or none at all. Part of the science of calculating a credit score is determining how much debt is too much for a given credit profile.
A longer credit history will increase your score. The length of your credit history makes up about 15% of your credit score. However, a high score is achievable with a short credit history if the rest of your credit report indicates responsible credit management.
Recent applications for, or newly opened, credit accounts will weigh against the rest of your credit history. This factor makes up about 10% of your score. FICO scores will distinguish between a search for a single loan and a search for many lines of credit, in part by the length of time over which inquiries occur. If you’re seeking a loan, do your rate shopping within a focused period of time, such as 30 days, to avoid lowering your credit score.
Several minor factors also can influence your score. About 10% of your score is acquired from these factors. For example, having a mix of credit types on your credit report – credit cards, installment loans such as a mortgage or auto loan, and personal lines of credit – is normal for people with longer credit histories and can slightly improve their scores.
It’s unlikely that each credit agency would give the same score to the same person since each agency collects their information from different creditors. Even when they collect from the same creditors, they update their records at different times. To get a more accurate picture, lenders pull FICO scores from all three agencies and then base their lending decisions on the middle of the three scores.
As you can see, calculating your credit score is not an exact science but these weighted factors will provide you with a good sense of what impacts your score. It’s important to always monitor your credit score and determine what you can do to maintain a high score. Look for future articles that will help you achieve and maintain a high credit score! For more information about your credit score, check out this site http://GetMoreCreditScore.com/info2.
By: Carey Snow
About the Author:
Carey Snow is a real estate investor and credit repair business owner who is sharing his credit knowledge and expertise to enlighten consumers about credit and assist them in repairing and maintaining their credit.
Micheal Jenkins
Credit scores are the equivalent of a financial report card. There is no way to avoid having credit scores since the Big Three consumer reporting agencies – Equifax, Trans Union, and Experian – keep tabs on your credit situation daily. These agencies then report your scores to any lender who requests it.
A credit score is also called a FICO score. If you have a low credit scores you could be turned down for home or auto loans. Your low score can also actually contribute toward your financial woes since it usually means higher monthly payments on any money you borrow.
There is hope, however! By taking the right steps, you can improve your credit scores significantly. Here are 7 tips for improving your credit scores.
Tip #1: Check your latest credit reports from each of the Big Three bureaus:
The first step toward better credit scores is to find out your current score from each of the Big Three consumer reporting bureaus. You can find a number of Web sites that give you access to this information for FREE. To find one, run a search in your favorite search engine using the keywords free credit report.
Tip #2: Immediately correct any blatant mistakes:
Download and review each report item by item, circling any blatant errors you find. Of particular importance are inaccurate unpaid balance flags, the existence of credit accounts that you never opened, and incorrect information concerning your current address. You must take each of these mistakes quite seriously and address them to both the relevant credit agency and, when applicable, the lender in question.
Tip #3: Pay your bills on time:
This is a common sense item, but people having credit problems often neglect it due to the snowballing nature of their debt situation. Paying your bills on time is very important, and nowadays even utility companies are reporting your payment history to the credit agencies. Hint: to improve your score even more, make your monthly credit card payments before the end of the statement period. This has the positive effect of keeping any charges made that month from even showing up as a balance on your cards, thereby improving your ongoing debt-to-credit limit ratio (see Tip#4).
Tip #4: Improve your debt-to-credit limit ratio:
In calculating your credit worthiness, the Big Three credit agencies factor in heavily your debt-to-credit limit ratio. As the term implies, this ratio is simply the result of dividing your total current credit card debt by the total credit limit across all of your cards. The ratio is always a number between 0 and 1, with numbers below 0.5 being most favorable. There are two ways to reduce your debt-to-credit limit ratio. One way is to simply reduce your credit card balances by paying them down. Another option that many people fail to consider: request an increase in credit limit from your creditors.
Tip #5: Pay off debt, don’t just move it around:
While it can be a smart move to transfer debt from your higher interest credit cards to your lower interest cards, this does not substitute for actually paying down your overall debt. Just moving your debt from card to card is not going to improve your score.
Tip #6: Avoid closing credit cards just prior to a loan application:
Some people believe that closing out some of their credit cards immediately prior to applying for a loan is a good idea. However, this is not true. On the contrary, it has the effect of suddenly increasing your debt-to-credit limit ratio, which is a credit score no-no. In fact, as long as you have the will power to use your credit cards wisely, it can be a good idea to keep multiple cards. Then, use these additional cards from time to time, charging small amounts and then quickly paying them off. This reflects positively in your credit scores as your having a healthy ability to manage your debt.
Tip #7: Understand the influence that bankruptcy has on your score:
As a final note, beware that having declared bankruptcy in the past can make it especially hard to achieve better credit scores. Bankruptcies can stay on your credit report for 7 to 10 years.
By: Jed Jones
About the Author:
A credit score is also called a FICO score. If you have a low credit scores you could be turned down for home or auto loans. Your low score can also actually contribute toward your financial woes since it usually means higher monthly payments on any money you borrow.
There is hope, however! By taking the right steps, you can improve your credit scores significantly. Here are 7 tips for improving your credit scores.
Tip #1: Check your latest credit reports from each of the Big Three bureaus:
The first step toward better credit scores is to find out your current score from each of the Big Three consumer reporting bureaus. You can find a number of Web sites that give you access to this information for FREE. To find one, run a search in your favorite search engine using the keywords free credit report.
Tip #2: Immediately correct any blatant mistakes:
Download and review each report item by item, circling any blatant errors you find. Of particular importance are inaccurate unpaid balance flags, the existence of credit accounts that you never opened, and incorrect information concerning your current address. You must take each of these mistakes quite seriously and address them to both the relevant credit agency and, when applicable, the lender in question.
Tip #3: Pay your bills on time:
This is a common sense item, but people having credit problems often neglect it due to the snowballing nature of their debt situation. Paying your bills on time is very important, and nowadays even utility companies are reporting your payment history to the credit agencies. Hint: to improve your score even more, make your monthly credit card payments before the end of the statement period. This has the positive effect of keeping any charges made that month from even showing up as a balance on your cards, thereby improving your ongoing debt-to-credit limit ratio (see Tip#4).
Tip #4: Improve your debt-to-credit limit ratio:
In calculating your credit worthiness, the Big Three credit agencies factor in heavily your debt-to-credit limit ratio. As the term implies, this ratio is simply the result of dividing your total current credit card debt by the total credit limit across all of your cards. The ratio is always a number between 0 and 1, with numbers below 0.5 being most favorable. There are two ways to reduce your debt-to-credit limit ratio. One way is to simply reduce your credit card balances by paying them down. Another option that many people fail to consider: request an increase in credit limit from your creditors.
Tip #5: Pay off debt, don’t just move it around:
While it can be a smart move to transfer debt from your higher interest credit cards to your lower interest cards, this does not substitute for actually paying down your overall debt. Just moving your debt from card to card is not going to improve your score.
Tip #6: Avoid closing credit cards just prior to a loan application:
Some people believe that closing out some of their credit cards immediately prior to applying for a loan is a good idea. However, this is not true. On the contrary, it has the effect of suddenly increasing your debt-to-credit limit ratio, which is a credit score no-no. In fact, as long as you have the will power to use your credit cards wisely, it can be a good idea to keep multiple cards. Then, use these additional cards from time to time, charging small amounts and then quickly paying them off. This reflects positively in your credit scores as your having a healthy ability to manage your debt.
Tip #7: Understand the influence that bankruptcy has on your score:
As a final note, beware that having declared bankruptcy in the past can make it especially hard to achieve better credit scores. Bankruptcies can stay on your credit report for 7 to 10 years.
By: Jed Jones
About the Author:
A 50-point improvement in your FICO score could save you $1,000s in annual debt payments. Improve your score by up to 249 points in 90 days with the Credit Secrets Bible: www.Success-Junky.com
Ismael Schmeichel