Archive for June, 2009
You really need to understand how credit scores are calculated if you want to improve your credit score,
The important thing to know is that there are several different types of credit scores. The Fair Isaac Corp. score (or FICO score), is the most widely accepted credit score. With over 90% of the largest U.S. banks using the FICO score to determine your creditworthiness, it is the closest thing to a standard for measuring a person’s ability to manage debt.
As a result, it is important to do everything you can to protect your FICO score, as a lower score can cost you thousands of dollars in interest payments on a loan.
How are Credit Scores Calculated?
While FICO does not disclose how they actually compute the credit score, it really is not much of a secret. The FICO score itself is calculated by using a combination of data that appears on your credit report. This includes approximately:
* 35 percent – An individual’s history of making credit payments on time
* 30 percent – The total debt to available credit ratio
* 15 percent – The length of time credit lines have been open
* 10 percent – The frequency with which someone applies for new credit
* 10 percent – Other factors such as the types of credit lines
In 2008, FICO made some modifications to the way they measure an individual’s credit score. The new system not only shows the how likely they are able to pay back debts, but it gives some insight as to how well they also manage debt in general.
One of the biggest improvements people will see is that in the past, one missed credit card payment could severely damage your credit score if it were to be reported by the lender. The 2008 FICO score is more lenient, in that it will be mostly forgiving to one mistake on an otherwise flawless credit report.
Another differing is that 2008 FICO credit score calculates the ability to manage multiple types of debt. For instance, FICO will reward people who have both revolving debt (credit card) and installment loans (auto and home loans). A person who can effectively manage many types of loans is considered more credit worthy.
Now that you know some of the ways credit scores are calculated, you can take advantage of some of the tricks to quickly increase your credit score.
By: Ryan
About the Author:
The important thing to know is that there are several different types of credit scores. The Fair Isaac Corp. score (or FICO score), is the most widely accepted credit score. With over 90% of the largest U.S. banks using the FICO score to determine your creditworthiness, it is the closest thing to a standard for measuring a person’s ability to manage debt.
As a result, it is important to do everything you can to protect your FICO score, as a lower score can cost you thousands of dollars in interest payments on a loan.
How are Credit Scores Calculated?
While FICO does not disclose how they actually compute the credit score, it really is not much of a secret. The FICO score itself is calculated by using a combination of data that appears on your credit report. This includes approximately:
* 35 percent – An individual’s history of making credit payments on time
* 30 percent – The total debt to available credit ratio
* 15 percent – The length of time credit lines have been open
* 10 percent – The frequency with which someone applies for new credit
* 10 percent – Other factors such as the types of credit lines
In 2008, FICO made some modifications to the way they measure an individual’s credit score. The new system not only shows the how likely they are able to pay back debts, but it gives some insight as to how well they also manage debt in general.
One of the biggest improvements people will see is that in the past, one missed credit card payment could severely damage your credit score if it were to be reported by the lender. The 2008 FICO score is more lenient, in that it will be mostly forgiving to one mistake on an otherwise flawless credit report.
Another differing is that 2008 FICO credit score calculates the ability to manage multiple types of debt. For instance, FICO will reward people who have both revolving debt (credit card) and installment loans (auto and home loans). A person who can effectively manage many types of loans is considered more credit worthy.
Now that you know some of the ways credit scores are calculated, you can take advantage of some of the tricks to quickly increase your credit score.
By: Ryan
About the Author:
Want to boost your credit quickly? Learn more by visiting the Fico Formula at: www.ficoformula.com
Matthew Ryman
clarissa.explainsitall asked:
I am looking to be added to a lease in a three bedroom apartment with two people who are already approved. I am stably employed but had a rough patch where I had trouble paying my bills and it has negatively impacted my credit score. Thanks in advance for any and all feedback!
Hank Lombard
I am looking to be added to a lease in a three bedroom apartment with two people who are already approved. I am stably employed but had a rough patch where I had trouble paying my bills and it has negatively impacted my credit score. Thanks in advance for any and all feedback!
Hank Lombard
JustCardOffers asked:
http://www.JustCardOffers.Com Fix credit score fast by paying down your credit cards. Paying off your installment loans can help your score, but not as dramatically as paying down revolving accounts.
Clarinda Shuter
nes99c asked:
Richie and Eric dig into the business of buying your FICO credit score up legally….for now!
Thaddeus Stark
Student loans can help you develop and build your credit score. Employers may review consumer credit scores as part of their hiring process. You can optimize educational and career opportunities by building and maintaining a solid payment history.
A credit score indicates how consumers handle debt. Understanding how credit scoring works is useful for making decisions about student educational loans and other credit that can potentially impact your education and career goals. The Fair Isaac Corporation developed its credit scoring (also known as FICO scoring) system based on weighting five aspects of a consumer’s credit history to achieve a score between 300 and 850.
How is my FICO Score Computed?
35% = Payment history: This category includes payment information on retail accounts, auto loans, mortgages, revolving credit, installment debt, and student loans. Delinquencies, repossessions, bankruptcies, wage garnishments, and liens are included. Public filings such as legal judgments can also show up and negatively impact your score, even if paid. Negative items on your payment history can lower your credit score for 7 to 10 years!
30% = Amounts owed: This category includes how much you owe and the percentage of available credit used for revolving accounts. A good way to improve your credit score is to avoid running up large balances or using more than 30% of your available credit.
15% = Length of credit history. The average consumer has approximately 14 years of credit history, but this isn’t necessarily true for students or those who’ve recently started careers. Repaying student loans on time provides a solid foundation for establishing a good credit score.
10% = New credit: Credit scores reflect new credit activity. Opening too many accounts too quickly can drop your credit score. It’s important to understand the difference between opening new credit accounts and credit inquiries; for example, if a potential lender or employer makes an inquiry it impacts your credit score less than applying for several credit cards in a short period of time.
10% = Types of Credit Used: The types of credit you have influences your credit score. Financial expert Suze Orman categorizes student loans as “good debt,” like mortgages or auto loans, but advises against opening and carrying balances on multiple credit cards. College students may be tempted to use credit cards as a financial “bridge” until payday, but this can result in accumulating excessive debt.
Student Loans: The Gateway to Your Future
As the cost of undergraduate, graduate, and professional education continues to increase, students are taking advantage of low cost federal student loans. According to the Project on Student Debt and the College Board’s Center for Economic and Policy Research, approximately two-thirds of recent graduates carry student loan debt and over the past decade, student debt levels have more than doubled.
These figures suggest that many students start their careers with significant debt before they’ve had a chance to build a solid credit score. As public academic institutions continue to face budget cutbacks and tuition increases, students may have to rely more heavily on student loans and credit cards to get by; this can have negative consequences for students’ credit scores and may even delay or divert career plans.
Career Transitions and Your Credit Score
If you’re considering a mid-life career change, a good credit score can help you obtain financing for the transition to a new career. It’s important to weigh short and long term financial goals when considering taking on student loan debt. Consulting a financial advisor can help establish a plan to fund your career transition while protecting your credit score.
Consolidate Student Loans
Traditionally, the interest rates for federal student loans are low–between 5% and 7.22%. Students can include multiple student educational loans that have different or variable interest rates into one consolidation loan with a fixed interest rate and single payment. The interest rate for consolidation loans is based on a weighted average of the interest rates of the different loans included in the consolidation.
Federal student loan interest rates are adjusted on July 1 and, on July 1, 2008, are expected to decrease significantly. Consolidating student loans fixes your interest rate and can help you avoid late or missed payments caused by managing multiple student loans; you may want to wait until after this year’s interest rate adjustment, however, to make an informed decision whether or not to consolidate.
When Should I Consolidate My Student Loans?
Students often consolidate loans during the grace period immediately following graduation, but it’s also possible to consolidate while you’re still in school. This may get you a lower rate on your consolidation loan but be aware that some loan cancellation or other specific loan benefits could be lost if you consolidate before you graduate or during your grace period.
Understanding Student Loan Debt
Unfortunately, it can be tempting to borrow more than you need for educational expenses. And it’s easy to forget that unlike grants and scholarships, student loans must be repaid, which can cause financial problems and damage your credit before you even have a chance to establish a good credit history. Late payments and collection activity on student loans leads to low credit scores–especially if, like many students, you have a short or limited credit history. A low credit score can limit the availability of some student loans and other types of credit including mortgage loans. And borrowing more than you need may affect your plans long after you’ve graduated–a 2006 Money Magazine article describes how some college grads are delaying buying a home or starting a family while they repay large student loan balances.
The Connection between Your Credit Score and Career
A spotty credit history can not only make it hard for you to get approved for loans, it could even ruin your career plans. Low credit scores can limit access to business loans and prospective employers often conduct background checks that include verifying your credit score. When you interview for jobs you may be asked to sign an authorization that allows prospective employers to check your background. Employers in the financial and retail industries and professions such as accounting and law typically use background checks as part of the hiring process, and a low credit score is a valid reason to deny employment.
Careful use of student loans can provide for your education and help avoid unnecessary debt. Managing student loan debt through prompt repayment and possibly consolidation can help establish a good credit score. Your education and credit score can open doors to your new career, and later, help you get financing for expanding a business, starting a company, or investing for your future.
By: Kelli Smith
About the Author:
A credit score indicates how consumers handle debt. Understanding how credit scoring works is useful for making decisions about student educational loans and other credit that can potentially impact your education and career goals. The Fair Isaac Corporation developed its credit scoring (also known as FICO scoring) system based on weighting five aspects of a consumer’s credit history to achieve a score between 300 and 850.
How is my FICO Score Computed?
35% = Payment history: This category includes payment information on retail accounts, auto loans, mortgages, revolving credit, installment debt, and student loans. Delinquencies, repossessions, bankruptcies, wage garnishments, and liens are included. Public filings such as legal judgments can also show up and negatively impact your score, even if paid. Negative items on your payment history can lower your credit score for 7 to 10 years!
30% = Amounts owed: This category includes how much you owe and the percentage of available credit used for revolving accounts. A good way to improve your credit score is to avoid running up large balances or using more than 30% of your available credit.
15% = Length of credit history. The average consumer has approximately 14 years of credit history, but this isn’t necessarily true for students or those who’ve recently started careers. Repaying student loans on time provides a solid foundation for establishing a good credit score.
10% = New credit: Credit scores reflect new credit activity. Opening too many accounts too quickly can drop your credit score. It’s important to understand the difference between opening new credit accounts and credit inquiries; for example, if a potential lender or employer makes an inquiry it impacts your credit score less than applying for several credit cards in a short period of time.
10% = Types of Credit Used: The types of credit you have influences your credit score. Financial expert Suze Orman categorizes student loans as “good debt,” like mortgages or auto loans, but advises against opening and carrying balances on multiple credit cards. College students may be tempted to use credit cards as a financial “bridge” until payday, but this can result in accumulating excessive debt.
Student Loans: The Gateway to Your Future
As the cost of undergraduate, graduate, and professional education continues to increase, students are taking advantage of low cost federal student loans. According to the Project on Student Debt and the College Board’s Center for Economic and Policy Research, approximately two-thirds of recent graduates carry student loan debt and over the past decade, student debt levels have more than doubled.
These figures suggest that many students start their careers with significant debt before they’ve had a chance to build a solid credit score. As public academic institutions continue to face budget cutbacks and tuition increases, students may have to rely more heavily on student loans and credit cards to get by; this can have negative consequences for students’ credit scores and may even delay or divert career plans.
Career Transitions and Your Credit Score
If you’re considering a mid-life career change, a good credit score can help you obtain financing for the transition to a new career. It’s important to weigh short and long term financial goals when considering taking on student loan debt. Consulting a financial advisor can help establish a plan to fund your career transition while protecting your credit score.
Consolidate Student Loans
Traditionally, the interest rates for federal student loans are low–between 5% and 7.22%. Students can include multiple student educational loans that have different or variable interest rates into one consolidation loan with a fixed interest rate and single payment. The interest rate for consolidation loans is based on a weighted average of the interest rates of the different loans included in the consolidation.
Federal student loan interest rates are adjusted on July 1 and, on July 1, 2008, are expected to decrease significantly. Consolidating student loans fixes your interest rate and can help you avoid late or missed payments caused by managing multiple student loans; you may want to wait until after this year’s interest rate adjustment, however, to make an informed decision whether or not to consolidate.
When Should I Consolidate My Student Loans?
Students often consolidate loans during the grace period immediately following graduation, but it’s also possible to consolidate while you’re still in school. This may get you a lower rate on your consolidation loan but be aware that some loan cancellation or other specific loan benefits could be lost if you consolidate before you graduate or during your grace period.
Understanding Student Loan Debt
Unfortunately, it can be tempting to borrow more than you need for educational expenses. And it’s easy to forget that unlike grants and scholarships, student loans must be repaid, which can cause financial problems and damage your credit before you even have a chance to establish a good credit history. Late payments and collection activity on student loans leads to low credit scores–especially if, like many students, you have a short or limited credit history. A low credit score can limit the availability of some student loans and other types of credit including mortgage loans. And borrowing more than you need may affect your plans long after you’ve graduated–a 2006 Money Magazine article describes how some college grads are delaying buying a home or starting a family while they repay large student loan balances.
The Connection between Your Credit Score and Career
A spotty credit history can not only make it hard for you to get approved for loans, it could even ruin your career plans. Low credit scores can limit access to business loans and prospective employers often conduct background checks that include verifying your credit score. When you interview for jobs you may be asked to sign an authorization that allows prospective employers to check your background. Employers in the financial and retail industries and professions such as accounting and law typically use background checks as part of the hiring process, and a low credit score is a valid reason to deny employment.
Careful use of student loans can provide for your education and help avoid unnecessary debt. Managing student loan debt through prompt repayment and possibly consolidation can help establish a good credit score. Your education and credit score can open doors to your new career, and later, help you get financing for expanding a business, starting a company, or investing for your future.
By: Kelli Smith
About the Author:
Kelli Smith is the senior editor for www.Edu411.org. Edu411.org is a career education directory for finding colleges and universities, training schools, and technical institutes.
Kimberlie Renneker
expertvillage asked:
Improve your credit score by making payments on time and keeping cards at a balance less than half the credit limit. Learn how to improve your credit score from a credit counselor in this free personal finance video.
Desmond Desmond
msamadi1 asked:
Credit fix, 4 videos talk about credit report, credit score, credit repair, debt collection, collection agencies, bankruptcy, foreclosure, public records, judgment, taxes and more
Soon Altenhofen
cj8307 asked:
I recently purchasing a 28k car and I just paid off ALL my credit cards. I have never ever been late on any of my accounts. I am enrolled in the identity theft program which allows you to see how your credit score will be effected from opening new accounts. It said that my credit score should go up since I purchased a new car. How is this so? I would think it’s suppose to drop b/c I’m increasing my debt.
Micheal Rieske
I recently purchasing a 28k car and I just paid off ALL my credit cards. I have never ever been late on any of my accounts. I am enrolled in the identity theft program which allows you to see how your credit score will be effected from opening new accounts. It said that my credit score should go up since I purchased a new car. How is this so? I would think it’s suppose to drop b/c I’m increasing my debt.
Micheal Rieske
7steps2720 asked:
The 7 STEPS TO A 720® CREDIT SCORE program was created when mortgage broker Philip X. Tirone noticed that good people with good intentions were consistently turned down for home loans. Those who did qualify often paid unnecessarily high interest rates. On a $300000 home loan, a person with a poor credit score could pay as much as $212040 extra over the course of 30 years. This is simply unacceptable. 7 STEPS TO A 720® CREDIT SCORE exposes the rules of the credit game, allowing countless …
Joey Streller
Do you think you need to repair your credit score fast? Does your credit report have some negatives on it? Do you have poor credit record? Have you ever made a lot of loan applications and missed some payments in the past? Then these tips on how to repair your credit score fast will show you how to deal with your problem permanently.
1. Correct Any Mistakes on Your Credit Report
One of the first things you should do if you want to repair your credit score fast is to correct any wrong info from your credit report.
Write to the credit bureau and request to correct the mistakes on your credit report. If in cases that they do not agree with you that it was a mistake, you can add a comment onto your credit report to explain. But, be sure to keep your comments neutral, and there is no accussation to anybody.
2. Create A Financial Plan
After taking care of any mistakes on your credit report, then you must start to manage your finances in a much better way. You should set a budget and stick to it. Only buy what is truly necessary for your needs.
3. Keep Your Credit Cards
If you want to to raise your credit score fast, you should maintain a good payment history on your credit cards. Use your credit cards only for necessary purchases.
About two to four credit cards is a good number to have. You will not be able to repair your credit score fast if you only have one credit card. Also, if you have more than four credit cards, you would have a bad credit report. Having too many cards with large balances on them would not help your credit score. You would probably be better off financially and for your credit score if you consolidate some of your debts into a lower interest loan. However, you should not really overdo it.
If you need to reduce your number of cards, drop the newest credit cards first. An older credit card will count for more points as you start to improve your credit score.
4. Always Send Payments on Time
Of all the ways to repair credits, it is very important to always pay on time. You should never miss a payment on any loan or bill that will show on your credit report. Even if a loan company or credit card company offers you a month or two grace periods as extension to make payments, it is better if you do not accept this offer. Missing the due date may still show as a missed payment on your credit report. So, it is better for you to make your payments on time, if you really want to repair your credits. Also, be sure that your payments are received on or before the due date.
5. Pay More Than The Minimum
When it is possible, send credit card payments that are more than the minimum amount due at any time that you can. It will help your credit rating, save you on interest, and would bring you closer to debt relief.
Take note not to max out your credit cards. Ensure that the balance amount is way below your credit limit. This will help improve your credit report.
6. Don’t Make Too Many Loan Applications
Applying for too many loan applications will quickly flag you as a possible bad payer, so do not ever do it. Also, do not switch credit cards several times to take advantage of offers, or get new loans to pay off old loans.
To consolidate all your debts, just do it once. If you are shopping around for the best terms, try not to give out your name and address.
7. Make That Phone Call
If you are in a situation where you will have a difficult time meeting the deadline for a payment, do make that phone call. It is much better for you to call them, than waiting for them to contact you. If you are going to miss payments, they might start with the collection agencies, and that is really the worst thing that can happen for your credit score.
Talk to them briefly and explain your situation truthfully. Be prepared to make them an offer and negotiate. Create a payment plan that is realistic for you. If they will offer you two payment-free months, say something like: “No thank you, I would prefer to keep paying a little each month”. This will help you avoid missed payments showing on your credit record and proves that you are really serious to have debt relief.
When you have a new payment plan worked out together with them, do try to ask them if they would agree to stop reporting on you, so that you have a chance to repair your credit score fast. Many companies will agree to this request, as long as you commit to send payments on time and not miss any payments on your new plan.
Once you follow these tips, you will be able to improve your credit score quick. It will also help you to manage your finances and achieve debt relief in the future.
By: Xylene Belita
About the Author:
1. Correct Any Mistakes on Your Credit Report
One of the first things you should do if you want to repair your credit score fast is to correct any wrong info from your credit report.
Write to the credit bureau and request to correct the mistakes on your credit report. If in cases that they do not agree with you that it was a mistake, you can add a comment onto your credit report to explain. But, be sure to keep your comments neutral, and there is no accussation to anybody.
2. Create A Financial Plan
After taking care of any mistakes on your credit report, then you must start to manage your finances in a much better way. You should set a budget and stick to it. Only buy what is truly necessary for your needs.
3. Keep Your Credit Cards
If you want to to raise your credit score fast, you should maintain a good payment history on your credit cards. Use your credit cards only for necessary purchases.
About two to four credit cards is a good number to have. You will not be able to repair your credit score fast if you only have one credit card. Also, if you have more than four credit cards, you would have a bad credit report. Having too many cards with large balances on them would not help your credit score. You would probably be better off financially and for your credit score if you consolidate some of your debts into a lower interest loan. However, you should not really overdo it.
If you need to reduce your number of cards, drop the newest credit cards first. An older credit card will count for more points as you start to improve your credit score.
4. Always Send Payments on Time
Of all the ways to repair credits, it is very important to always pay on time. You should never miss a payment on any loan or bill that will show on your credit report. Even if a loan company or credit card company offers you a month or two grace periods as extension to make payments, it is better if you do not accept this offer. Missing the due date may still show as a missed payment on your credit report. So, it is better for you to make your payments on time, if you really want to repair your credits. Also, be sure that your payments are received on or before the due date.
5. Pay More Than The Minimum
When it is possible, send credit card payments that are more than the minimum amount due at any time that you can. It will help your credit rating, save you on interest, and would bring you closer to debt relief.
Take note not to max out your credit cards. Ensure that the balance amount is way below your credit limit. This will help improve your credit report.
6. Don’t Make Too Many Loan Applications
Applying for too many loan applications will quickly flag you as a possible bad payer, so do not ever do it. Also, do not switch credit cards several times to take advantage of offers, or get new loans to pay off old loans.
To consolidate all your debts, just do it once. If you are shopping around for the best terms, try not to give out your name and address.
7. Make That Phone Call
If you are in a situation where you will have a difficult time meeting the deadline for a payment, do make that phone call. It is much better for you to call them, than waiting for them to contact you. If you are going to miss payments, they might start with the collection agencies, and that is really the worst thing that can happen for your credit score.
Talk to them briefly and explain your situation truthfully. Be prepared to make them an offer and negotiate. Create a payment plan that is realistic for you. If they will offer you two payment-free months, say something like: “No thank you, I would prefer to keep paying a little each month”. This will help you avoid missed payments showing on your credit record and proves that you are really serious to have debt relief.
When you have a new payment plan worked out together with them, do try to ask them if they would agree to stop reporting on you, so that you have a chance to repair your credit score fast. Many companies will agree to this request, as long as you commit to send payments on time and not miss any payments on your new plan.
Once you follow these tips, you will be able to improve your credit score quick. It will also help you to manage your finances and achieve debt relief in the future.
By: Xylene Belita
About the Author:
Do you know that you can also easily fix finances in 3 easy steps? Find out at http://www.earndollar.ws/creditrepair. How to Fix Finances in 3 Easy Steps.
Brendon Eichelmann