Some Tips to Increase Your Credit Score Value

Some Tips to Increase Your Credit Score Value

• When it comes to a poor credit rating, there's no quick fix. It's kind of like managing weight. It's so easy to gain weight over a short period of time with poor health habits. Losing the weight is a different story. It takes sometimes 2-3 times longer to lose weight than it took to gain it. Credit scores are similarly difficult to rebuild. There are, however, strategies to help you strengthen your credit score over time.

• Ask your credit card company to increase your limit: They may deny you, but if they don't, it's one way to improve your credit score over time. The catch is that you can't max out your card once your limit has been increased. Leave the credit window open and pay down your balance to $0 for the best credit results.

• Open numerous accounts: In the short term, this won't do much to improve your score. Over time, however, it is the amount of credit you aren't using or can pay down each month that will build your score. Spending on every card you open can lead you down a path of surmounting debt. Be very strategic if you try this method to build your score. Use them intermittently for small purchases to keep your account open, and pay them off immediately. You will also have more cards to track for fraudulent charges. Only open as many accounts as you can reasonably monitor for the best results from this strategy.

• Never skip a payment or pay late: Paying your mortgage late or forgetting to pay a credit card bill can cause even good credit scores to plummet if they get listed on your rating. Having a high credit score can mean the difference in thousands of dollars in extra fees and interest over time for large loans and expenditures. If you know you're going to have difficulty making a payment on time, contact your creditor. You may be able to get the payment date moved temporarily or work out some other arrangement to ensure your credit score does not suffer due to unforeseen circumstances.

• Don't max out your credit card: Having good payment history and owning a credit card are only pieces of the credit score equation. Try not to carry a balance that is over 35% of your credit limit. If you have a high balance on one card and relatively low balances on others, it may make sense to transfer the high balance to several low balance cards to keep the percentage of each card at or under 35%.

• Don't close unused card accounts: Long histories of holding a card positively impacts your credit score. Even if you don't use a card, you should hold onto and monitor the account. It can be beneficial even if the account is completely inactive.

• Use your home equity line to pay down debt: Occasionally, it makes sense to transfer your credit card debt to a new or existing home equity line. If you use this approach, you should only transfer debt if the interest rate on your home equity line is lower than that of your credit card. You should also focus on paying down the debt instead of carrying it on the home equity line. This strategy can improve your score because the scoring formula that FICO uses evaluates your handling of different types of debt.

• Individualize your accounts after divorce: Since married couples share debt burdens, what one spouse does will affect the other's score. Joint accounts should be paid down and closed or transferred into individual accounts. Then, you will have the challenge of rebuilding independent credit with new cards, loans, or a mortgage

• Pay off debt as you go: Make extra payments throughout the month to prevent the appearance of debt accumulation over the course of a month. It will leave you without as much money in your bank account through the month but can help build and keep your credit score higher.

• Become a joint credit holder on someone else's account: If you know someone who has great payment history and a good credit score, tying into his or her account can actually help you improve your credit score. You need to be able to trust in whoever's account you join, however, because his or her poor payments will affect you. Getting removed from a joint account may be difficult, as well.

• Review your credit report: Make sure you contact credit reporting companies and get outdated or incorrect information removed from your history. Inaccuracies can take up to a month to correct, but is a short-term solution to boosting your score.

• Don't apply for too many credit cards at once: Inquiry information is reported to credit reporting agencies and will be listed on your report for two years. Multiple inquiries can significantly impact your credit score for up to a year. Mortgages and car loans are exceptions to this strategy. Multiple inquiries will be treated singularly and will not affect your credit score.

• Talk with creditors: If you face a difficult financial situation, your credit may work with you to find a viable solution to help you pay off debt without defaulting. Not talking to your creditor and defaulting on a card may mean you will be contacted by a collections agency, and your credit score will certainly be impacted.

• Keep your knowledge of your credit score up-to-date so that you know if you need to work on rebuilding or maintaining it. Contacting a credit specialist can also be beneficial in informing you about what is going on with your credit. At National Credit Advisors, we will provide you with a free credit case evaluation and help you build your credit with a number of proven tactics.

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Tips and Process of Buying Home in Credit Score

Tips and Process of Buying Home in Credit Score

• A credit score is simply a numerical representation of your credit worthiness. Your credit score refers to your FICO credit score, developed by Fair, Isaac & Co. to rate you as a credit risk. FICO scores generally range from 300 and 850.

For most loan programs, scores below 620 are ranked below average; between 620 and 680 are average; higher than 680 is above average. Excellent scores are in the 700's. The higher the score, the better-the higher the credit score, the better the credit risk.

When you apply for credit your score does not come directly from FICO. Instead each bureau has its own version of the rating system with its own name: Equifax is called Beacon, Trans Union is Empirica and Experian is Experian/Fair Issac. However, the calculations used to determine these scores are different for each bureau and the formula is not disclosed to the consumer.

Most lenders pull a tri-merged credit report. This provides the lender with scores from all three bureaus. In general, the middle of the 3 scores is used to determine eligibility. In a case where there are two or more borrowers, the lowest middle score is used.

• How is my score determined? Below are the approximate percentages that determine your FICO Score.

- Payment history (35%) If you have any accounts sent to collection or bankruptcies, they will have the largest impact on your score.
- Outstanding Debt (30%) High balances on credit cards, or more precisely, balances that are close to your credit limit can negatively affect your score. Keep your balances below 30%.
- Length of your credit history (15%) How long have your accounts been open? The longer, the better.
- Recent inquiries (10%) Every time you apply for credit of any kind, you create an inquiry on your credit report.
- Types of credit in use (10%) What kind of accounts do you have and how much do you owe.

Here are a few ways to establish good credit:

- If you are overextended, do your best to consolidate your debts.
- Pay off all delinquent, past due accounts, judgments, liens, etc. This will not remove the account from your credit report, but it will show you have cleared up past issues. The longer these items remain "unpaid," the longer it will take to establish good credit.
- Keep all credit you now have current. This simply means pay all of your house payments, cards, and any other credit on time!
- Get new credit! This can be achieved by getting creditors to extend you new credit opportunities. This can be difficult as most creditors require good credit; a catch 22.

• Credit Score FAQ:

1. Does every consumer have a credit score?
No. For a credit score to be calculated on your credit report, the report must contain one account that has been open for at least six months..

2. How often does the credit score change?
Your file is continually updated with new information from your creditors. Your score is calculated based on the latest information contained in your file at the time the score is requested. Thus, your score from a month ago is probably not the same score a lender would get from the credit-reporting agency today.

3. How long does it take to rebuild my score?
The length of time to rebuild your score depends on the reason for the low score. Most decreases in scores are due to the addition of new credit information to your credit report such as a delinquency or an inquiry. Negative information and Chapter 13 bankruptcies remain on file for seven years. Chapter 7, 11 and 12 bankruptcies remain on file for ten years from date filing.

4. If my spouse has bad credit could it affect my credit score?
If you hold a joint credit account, have co-signed a loan or have authorized use of another person's credit, these items could affect your score if they appear on your credit report. Remember: if there are two or more borrowers, the lowest middle score is used.


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Tips and Process of B in Credit Score

Tips and Process of B in Credit Score

Credit Score Insurance Value and Auto Insurance Cost

Credit Score Insurance Value and Auto Insurance Cost

• While shopping for auto insurance, an individual always aims for lower cost of insurance. In that case a good credit score may help to lower the cost. Credit score is a statistical method of evaluating an applicant's credit worthiness. Companies are always trying to pool that part of the consumers which will provide the maximum profit with minimum loss. So they try to judge the rate of an insurance policy against the actual amount of claim. It has been found that almost all auto insurers use the credit information to decide whether to issue a policy. They even set the premium level on the basis of the credit score.

The companies generally do not look at the actual credit report. They just look out for the credit score. In fact they receive the credit score from any of the three major national credit depositories - Equifax, Experian and TransUnion. Credit scoring is a method to determine the likelihood that credit users will pay their bills.

• Credit scores are prepared by analyzing a borrower's credit history. The factors considered while calculating a credit score are:

1. The duration for which credit is used.
2. The amount of credit used versus the amount of credit available.
3. Record of whether payments are made in time.
4. Employment history.
5. Length of time at present residence.
6. Negative credit information such as bankruptcies, charge-offs, collections, etc.

Now the insurance score is based on the FICO score. It is a credit score developed by Fair Isaac & Co.

• Raise the FICO score: One can raise the FICO score over a period of time through the following ways:

1. Pay your bills in time. Late payments can have a serious impact on your score.
2. Reduce your credit-card balances. If you are "maxed" out on your credit cards, this will affect your credit score negatively.
3. If you have limited credit, obtain additional credit. Not having sufficient credit can negatively impact your score.
4. Do not apply for credit frequently. Having a large number of inquiries on your credit report can worsen your score.

• Insurance score: There is another concept called insurance score which also plays an important role in determining the cost of insurance. An insurance score predicts whether a person is likely to file a claim in the future. This helps the insurance companies to determine the amount of premium to be charged. An insurance score is a numerical ranking based on a person's credit history. It predicts the average claim behavior of a group of people with essentially the same credit history. Typically a good score is assumed to be above 760 and a bad score is below 600. People with low insurance scores tend to file more claims. But there are exceptions. For example, It has been found that teenagers as a group have more accidents than people of other age groups. But there are some teenager drivers who never had an accident.

Insurance scores do not include data on race or income because companies do not collect this information for insurance. Insurance score is not much concerned with the tendency to take a new credit. Instead it focuses on the issue of stability.

• Studies have shown that how a person constructs his financial planning is a good predictor of insurance claims. It is accepted that people who manage their finances well can also manage other important aspects of their lives, such as driving a car. The factors such as geographical area, previous crashes, age and gender, insurance scores collectively enable auto insurers to price more accurately, so that people less likely to file a claim pay less for their insurance than people who are more likely to file a claim. Insurance scores are useful to the insurer to differentiate between lower and higher insurance risks people and thus to charge a respective premium.

There exists a kind of debate regarding the use of insurance credit scoring. Insurance companies claim that the use of these scores helps them to issue new and renewal insurance policies based on objective, accurate, and consistent information, better anticipate claims and better control risk. This enables them to offer more insurance coverage to more consumers at a fairer cost.

• Opponents of insurance credit score argue that companies can use insurance credit scores to non-renew coverage regardless of whether a claim has been filed or premiums have been paid in time and that credit scoring focuses on a consumer's economic status. People with poor credit scores sometimes pay 4 to 5 times as much as the other consumer.

One aspect of insurance score is very important. While it is easy to obtain the credit score, it is difficult to get the insurance score. There is no hard and fast rule on the part of companies to hand it over and most companies don't.

This article may be freely republished in any electronic media provided author biobox and the links are kept as it is.

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Maybe? My Credit Score Affect My Education and Careers?

Maybe? My Credit Score Affect My Education and Careers?

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.

Kelli Smith is the senior editor for http://www.Edu411.org Edu411 is a career education directory for finding colleges and universities, training schools, and technical institutes.

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FICO Credit Score Changes

FICO Credit Score Changes

Consumers need to know that as of February 14, 2009, Experian based FICO scores and reports, previously available at myfico.com, are no longer available to consumers. As Barry writes at myfico.com, "The change will be effective on February 14th, 2009. While Experian's decision eliminates the consumers' ability to see their own FICO® scores, it will not impact your (lenders) ability to use FICO® scores in your lending decisions."

Experts agree that FICO® scores are the most widely used measure of consumer creditworthiness used by lenders in the Unites States. FICO® scores are credit scores computed by Fair Isaac Corporation using the company's proprietary computational formulas. Fair Isaac Corporation uses the credit information that Experian, Transunion and Equifax compiles about each consumer and runs this information through their complex formulas to arrive at three FICO® scores - one score per credit report.

Why is Experian's decision important to consumers? Those individuals interested in augmenting their credit scores, repairing their credit, or understanding how lenders are making credit decisions about them, now have one less reliable avenue through which to try to assess their credit position prior to borrowing. If knowledge is power, consumers now have even less power to understand their credit score and if need be, understand that they need to fix bad credit scores.

Before any appreciation can be gained about what this change means in terms of consumer rights, it is important to understand the limitations that already exist on a consumer's ability to accurately assess their credit score. The three major credit reporting agencies - Experian, Equifax, and Transunion - each gather information about a consumer and compile that information into a credit report. A consumer recently gained the right to an annual, free copy of these 3 reports. However, each of these CRAs use their own credit scoring models, different from the model used by Fair Isaac Corporation.

For this reason, consumers who wish to know what their FICO® scores are must request, and pay for, 3 FICO® scores from myfico.com. The reason for this is that each CRA compiles their own, and often different, credit information on a consumer. Each FICO score is based on one of the three CRA reports, and the three FICO® scores can differ by very significant numbers.

Many consumers incorrectly assume that the FICO® scores they retrieve from myfico.com are the same ones that lenders see prior to assessing their creditworthiness and therefore, the price they will pay for that credit. As of February 14, this is not necessarily the case. Not only will consumers not know what score (if any) is being provided based on Experian credit data, they will not know if a lender is basing a decision on one, two or three scores.

As Smartmoney magazine reports, Experian spokeswoman Sue Henson describes Experian's relationship with Fair Isaac Corp. as "not strategic" and refers to the scores consumers access at myfico.com as "educational". She further points out: "They are not necessarily by any means the scores lenders are using."

What scores are lenders using? Good question. What scores and/or credit reports should consumers focus on if they want to heighten credit scores or repair credit? Good question.

The reality is that although a consumer can access their credit reports from the CRAs once annually for free, the scores contained on each of those reports are not FICO® scores. They are the scores computed using the 3 CRAs different scoring methods. Only the scores provided by Fair Isaac Corporation are real, genuine FICO® scores. Consumers must pay Fair Isaac Corporation to access their 3 FICO® scores - scores that are based on the information contained in the three reports, but that can differ significantly.

• What is a consumer to do?

Many consumer advocates are now suggesting that consumers looking to access credit in any form ask the lenders to tell them what score and information they are basing their decisions on. If a lender finds this request too challenging, tell that lender that you will not do business with them for these very reasons and go elsewhere.

Outside of that, the best a consumer can do is to request their free annual Experian credit report (along with the other two - Transunion and Equifax). Study the report to ensure that all information being reported is accurate and up to date. If it is not, begin the steps involved to see that it is corrected. This is the best a consumer can do to attempt to ensure that their FICO® scores accurately reflect their credit worthiness. There is still no guarantee, even if you pay for the 2 FICO® scores you can still access, that the scores you see are the same scores your lenders will see.

Although every Credit Reporting Bureau compiles information about each consumer and provides a credit score based on their own scoring model, and Fair Isaac Corporation compiles FICO® scores using this data and their own credit scoring system, learning as much as possible about how Fair Isaac Corporation weighs general categories of consumer behavior can provide a general guide to how consumers should approach building good credit scores.

Learn more about your Credit Score.

Repair Bad Credit information and resources.

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Easy Tips to Increase Credit Score Value

Easy Tips to Increase Credit Score Value

Times are hard and many of us are in worse than ever situation, several applications for requirements like property loans, car loans, or credit cards face rejections by creditors and the reason mostly is a poor score. Thus it is very important to increase credit score and maintain a good number.

There have been so many efforts by financial advisors to warn consumers about the value of a good score however, it's still overlooked by a majority of consumers.

• The Credit Score and the Math Behind It

Credit score is a valuable utility for lenders. This is a calculated by a report in tabular format which contains all your major financial transactions. Any payment defaults, failures in credit and loan accounts are clearly visible in this.

All this with other factors like, payment history, outstanding debt, length of credit sums up to make your credit score. Scores are generally between 300 and 850. Higher score means better credit.

To qualify for prime rates on home loans, auto loans, and credit cards the score should be typically above 680.

Payment history with creditors is important for potential lenders as they are curious to know how disciplined you have been in payments. Moreover, having too much debt can also negatively affect your score.

• The Value of Credit Score

Creditors have various methods to evaluate an individual's credit worthiness. To speed up the process, several lenders start by reviewing a credit score. To differentiate good applicants from the bad, they put a tag for a minimum score requirement. If your score falls below this requirement, it will be an immediate credit denial.

• How Credit Score Will Affect You

- A good credit and high credit scores makes you eligible to easily secure loans and credit cards at very low interest rates. The rates on any loan from mortgages to credit cards are directly linked from your core. In addition, for those exciting deals like the zero percent car loans, you would need a great score as one of the qualification.
- Job applicants are being screened for good credit and today many employers are looking for credit histories to thin the herd of applicants they receive for job openings. This thought of checking an applicant's credit is that if you cannot pay your bills on time or be financially responsible then it is possible that you will not make a very good employee.
- Auto Insurance is another area where your credit scores and credit history is very important. Auto insurance companies are looking at client's scores to determine the applicable insurance rates. This is an area where we can see that to increase credit score is an imperative.

• Tips to Increase Your Score

Credit score report provides creditors with a clear Risk-to-Reward ratio picture and help them arrive a decision to approve or reject your application. Follow these simple steps which can help you to increase your credit score

- Timely payment of your dues: Any failure in the bill payments within the specified duration can adversely affect your score. Payment history takes up 35% from your total score so defaulting in payments penalizes the total score.
- Keep them informed: Some of the creditors could grant you a grace period upon requested and you have made them aware of your current poor financial situation.
- Use the plastic responsibly: Have a limit on the number of credit cards you possess and always keep track your expenses to avoid piling up more bills then you can repay. Keeping credit cards at their maximum limit can be harmful. Keep cards at about 25% of their maximum limit.
- Reduce your outstanding debts: Debt contributes to 30% of scoring. Thus, the more debt you have, the lower your score. At this stage, you can also try to arrange a debt settlement negotiation with your creditor.



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