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Understanding Your Credit Score Information

Posted on June 24th, 2009 in Credit by admin

Credit score information allows lenders to gauge a credit applicant if he or she is worth the risk of availing credit. After all, credit institutions are into a business and would want to profit from their investments in terms of lending their money resources. It is just fair that they try to lend it to people who are responsible enough to pay them back later on.

Lenders and credit institutions try to assess each credit application by looking at the applicant’s credit score information. Through it, these institutions will be able to determine if an applicant is worth the risk. The credit score is obtained from information that is based on past credit activities of the applicant as well as other related information. All these can be found on the applicant’s credit report.

A credit score is calculated base don the various information contained in the credit report. Different factors come into play when a credit score is calculated. A designed formula is used by credit reporting agencies to come up with the credit score. The formula takes into account the information from the credit report, both the good and the bad entries to come up with the appropriate score.

In order for this score to be calculated, the credit report must at least have one account for at least six months as well as one that has been updated for the same period. This will ensure that there is enough recent information in the credit report from which to base their calculations.

Payment history accounts for about 35 percent of the credit score. This includes on time payments as well as delinquent one which is considered when calculating the credit score. Public records that find its way into the credit report such as delinquency payments, bankruptcies, lawsuits, etc. may also be considered when computing for your credit score.

The amount of credit that you have availed in the past accounts for about 30 percent of the credit score. Not only is the total amount looked upon but also the amount borrowed from different accounts. The balances on certain accounts may also affect the credit score. Maintaining a small balance for example, will have a positive effect on the credit report and may help keep your credit score up.

The length of your credit history accounts for 15 percent of your credit score. Your oldest account and the average age of your other accounts are taken into consideration when computing for your credit score. Also being considered is the length of time that has passed since you have used certain accounts.

The number of new credits availed account for about 10 percent of your credit score. This includes the length of time that has passed since you have opened a new account. Also considered for this is the number of credit requests that you have made in a one year period. Credit report inquiries from lenders are also taken into account when computing for your credit score.

The types of credit that you have availed accounts for 10 percent of the credit score information that goes into the calculation of the credit reporting agencies. Revolving credit in terms of credit card debts as well as installment credit in terms of personal loans and mortgages are taken into account when calculating for your credit score.

The formulas used are proprietary tools used by the different credit reporting agencies in calculating for your credit score. But more or less, this is how the information in the credit report is used to come up with a viable credit score to assess your credit risk.

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Check Your Credit Score

Posted on June 23rd, 2009 in Credit by admin

If you are thinking of applying for a loan, it will be a good idea to first check your credit score. This will give you an indication whether your request will be approved or not and how much interest you will have to pay.

So how do you check your credit score? For that, you will need to get it from a credit agency. These three are namely Experian, Equifax or Transunion. People can log in to their site and request a copy which is absolutely free.

Your credit score could range from 350 to 750 points and the higher it is, the better. If your score is below 700, then you need to improve on it.

You do that by knowing your current credit score and then reviewing it. Look for errors and if there happens to be some, take the appropriate steps to fix them. You should call the credit agency to report the error and then send the supporting documents by mail.

Never send the original copies because if they lose it, you have nothing left to support your claims so send photocopies.

The next step is for the crediting agency to conduct an investigation into the matter. If your creditor cannot produce anything, then the error is immediately removed from your record and a revised copy will be sent to you free of charge.

But if the report is correct, then you will have to take the appropriate steps to remove it. Your credit score may go down depending on your credit history. If you have unpaid loans or have incurred late payments in your credit card, then you have to pay them.

Remember that these things will be in your credit report for the next 7 years while filing for bankruptcy lasts for about ten so you can’t run from it.

You will have to find a way to come up with the money by working overtime, cutting down on your expenses, getting a second job or selling some of your valuables. If you don’t know what to do, it wouldn’t hurt to swallow your pride and ask for help as there are financial advisers that are willing to help you go through this time.

If things are not that bad, perhaps you can make a deal with your creditor so this will not appear on your record thus having no effect on your credit score. Just make sure you stick to the bargain because if you fail to do so, don’t expect them to be so generous the next time this happens.

A year later, you can request for a new copy of your credit report to see if the steps you have taken have paid off. If you see a significant improvement versus the year before, you know you are doing something right and you won’t have a problem anymore applying for a loan.

Checking your credit score is something people should do regularly by getting a copy from a crediting agency. There are three to choose from and you can get a copy from all three at the same time or every few months.

The scoring system used by all three are different but all point to one conclusion and that is whether or not you have good or bad credit.

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A Good Credit Score

Posted on June 21st, 2009 in Credit by admin

What is credit score? It is a three digit number that tells creditor whether you can avail of a loan at a high or low interest rate. If your credit score is very low, there is also a possibility that your application will be disapprove. Naturally, you don’t want that to happen and this can only be achieved if you have a good credit score.

A good credit score as experts have put it should be 700 or higher. It is not unrealistic to achieve as 60% of the population is able to do it. The only thing you have to do is pay your bills on time which includes credits cards and other loans that you have had in the past. Doing so will avoid incurring any penalties that will be reflected in your credit report.

But how come some people are not able to get a good credit score? It is perhaps because they are unable to pay the money back and many of them continue to accumulate this amount. This happens due to their uncontrollable urge to shop and the interest that grows.

Some people are able to pay for it but it is now considered as a late payment. Those who ignore calls or mails from the bank will be dubbed as “unpaid.” This information is posted on your credit report so that lenders which you might approach in the future will already be careful.

To obtain a good credit score, you have to pay your debts. Cutting down on your expenses, working overtime, getting a second job and selling some stuff can help but it is not enough. This is why people are encouraged to talk with their creditors so an arrangement can be made that will hopefully prevent this from ever being reported.

Another solution will be to borrowing money from friends and relatives. Some people will help while others won’t. The only benefit from this is that they won’t charge you any interest. You will still have to pay them otherwise you will lose the only people you can turn to if you have a problem.

You could have gotten a good credit score only if you were able to monitor your expenses. One advice that a lot of experts say is that if you have a credit card, you should only use up about 25% of the limit. To avoid interest, make sure that you pay the whole amount and not just the minimum.

If you have done well and the bank wants to increase your credit, let them just be sure to stick to the strategy.

Errors on the part of the creditor may have also prevented you from getting a good credit score. So, review your credit report and see if everything there is accurate. If there are mistakes, report it and show proof with the proper documents. Your credit score should improve afterwards should the investigation work out in your favor.

A good credit score should be at least 700 and above so you can avail loans at a low interest. You may have done well this year but things could change over the next 12 months so if you want it to stay that way, monitor where money is going because when it comes to overspending, there is no one to blame except yourself.

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What Is Considered a Good Credit Score

Posted on June 20th, 2009 in Credit by admin

What is a considered a good credit score? A lot of experts say that you should get a score of 700 and above so that you are able to get a loan at a lower interest rate.

Is this easy to achieve? Given that 60% of Americans can do, then the answer is yes. You just have to pay your bills and debts on time to avoid incurring any penalties that could have a red flag on your credit report.

The reason why there are still people who cannot get a good credit score is because they have spend beyond their means. They are unable to resist the temptation to use that piece of plastic in a store thinking that they can get away just paying the minimum requirement monthly but the difference grows thanks to interest.

What happens is that they encounter late payments and are marked as “unpaid.” This is then reflected in their credit report which creditors will see and will make applying for a loan difficult to almost impossible.

The only solution is to clean up your act and pay these debts. You will probably have to cut down on your expenses and sell a few items. If this is not enough, work overtime if the company you work for allows you to do so. If it doesn’t, see if you can get a second job.

Try borrowing money from friends and relatives. The nice part about borrowing from people you know is that you won’t be charged an interest fee. Just and make sure you pay them.

Could this have been avoided? Yes if you were able to monitor your expenses. One of the present problems right now here in America is the housing crisis and if are one of those that couldn’t pay for it anymore, this has a significant effect on your credit score.

Now that you know what is considered to be a good credit score, the question now is can you do it? This is something you can answer on your own but if you need help, there are financial advisers that you can call on to help. You will have to do your share as well by sticking to the map that has been planned out.

If you are just a few points away from reaching 700, look at your credit report again to see if there are any errors. Chances are, there is one there that you can correct as long as you can prove to the crediting agency that this is not true.

Since they won’t take your word for it, be sure to have the supporting documents. Never send the original and instead send photocopies so you still have something to show later on. Once this is with them, an investigation will be conducted. If your claims are true, then they have no choice but to make the corrections on your credit score.

The factors that are used to measure your credit score varies among the different crediting agencies. With that said, there is no standard as to what is considered to be a good credit score. Through the years, it was just accepted that anything above 700 is good so until this is standardized, this is something that everyone must hope to attain.

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What Is a Good Credit Score

Posted on June 18th, 2009 in Credit by admin

Your credit score has a profound effect in terms of the interest rate you will be paying when you apply for a loan. This is the basis that lenders use to determine if you will be able to pay for the amount in the future and if you need money to pay for college or renovate the home, it is good to know what it means to have a good credit score?

The credit score ranges from 340 to 850. Creditors determine this by reviewing your payment history, amounts that you owe, the length of your credit history, the types of credits you have used and new credit.

If your credit score is over 700, then you have a good credit score. This means you are more likely to receive other financing options and better interests compared to someone who scored lower.

Majority of Americans approximately 60% of them have a good credit score. This means that while many of us are doing well, there are others who need to improve theirs. Should you be one of those who got a lower rating, don’t worry because you still have a chance to improve it.

You can do this by paying off your debts especially if most of these are reflected in your credit card bill. The best approach is to deal with the credit card that has the highest interest rate then work on the rest.

Should there be a problem coming up with the money, you must contact your creditor regarding the situation so a payment arrangement can be made so your late payments will be seen in your credit report.

It’s nice to have many credit cards but if you have a hard time monitoring which ones were already paid, don’t even think of getting another one as this can lower your credit score. You also don’t have to close unused accounts because a zero balance can also work to your advantage.

At the same time, people with good credit scores must never open new accounts especially if their credit history is less than 3 years old. This may bite you back later on since you may not be able to handle this properly.

There are some who know that they deserve a higher credit score than the one that came out in the report. If you feel that there is something wrong, you must call your lender because it is possible that the limit that was reported is much lower than what you are aware of. Should this be the case, it is only right that you have this corrected.

To know if you have a good credit score, you can get in touch either with Experian, Equifax or Transunion. These three are individual credit agencies and each of them should reflect the same figures. You should get a copy from one or all three at least once a year to know your current standing as your transactions this year may be higher versus the previous year that could either be good or bad for you.

If you don’t want any problems make sure that you have a good credit score at all times. If you need help, there are financial advisers that are more than willing to help you out.

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What Is a Credit Report Score

Posted on June 17th, 2009 in Credit by admin

A credit repot score is the basis used by lenders to determine if your loan application will be approved or not. If your credit report score is above 700, there won’t be any problems and your loan will be granted with low interest rates. If however you score below this figure, you will be charged a higher interest rate and in the most extreme cases, they will not approve your loan application.

But how do creditors come up with this figure? Basically, they do this by reviewing credit related information such as your payment history to find out if you have ever had any late payments or filed for bankruptcy. They will also check how much money you owe not only on your credit card bill but also outstanding loans.

They will also take into account the length of your credit history. Also, a lot of people apply for new credit and a few other minor factors that could bring up or down your credit score.

What is not in your credit report scores is your color, gender, marital status, national origin and religion as this is not relevant. Creditors do not also consider if you are receiving public assistance or any consumer rights that are under the federal Equal Credit Opportunity Act or the Fair Credit Reporting Act.

You can get a copy of your credit report score so you know what where you stand. You can get this from one of three credit reporting agencies namely Experian, Equifax or Transunion. Consumers are advised to get a copy at least once a year since it changes annually.

If you credit report score is not satisfactory, you must do your best to improve it. Some of the things you can do include paying your bills on time, contacting your creditor regarding your situation so an arrangement can be made and seeing a non profit credit counselor who will help you manage your finances.

As much as possible, you must never file for bankruptcy because it will be very difficult to achieve a good standing.

When you happen to see errors in your credit report and believe that there is a mistake, you must write a letter immediately to the agency where you got this document so this can be corrected. You must state the issue and any supporting paperwork to strengthen your claim. Never send the originals so have something to hold on to and if this is sent by a courier, make sure that you get a copy of the return receipt so you can follow this up with whoever got it.

The reporting agency will then conduct an investigation by contacting your creditors. If the creditor cannot verify their entry, they have no choice but to remove this from your record and you will receive a free copy of the revised credit report score. The same goes when an error has been made and a copy of this revised version will also be sent to other credit agencies.

Now that you know what a credit report score is, it is time to find out what is your standing. This should be good at all times so you get the best deals when you have to apply for a loan to pay for college tuition, buying a car or a new home.

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