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.


Article Source: http://EzineArticles.com/2029886

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.

Article Source: https://EzineArticles.com/expert/Evan_Smith/21812

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.

Article Source: http://EzineArticles.com/expert/Kelli_D_Smith/230052

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.

Article Source: http://EzineArticles.com/expert/Nora_Hansell/22582

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.



Article Source: http://EzineArticles.com/3657309

700 Credit Score - Is It a Good Value?

700 Credit Score - Is It a Good Value?

A 700 credit score is quite common. If you are wondering whether a 700 credit score is good or bad, and you would like to know how to improve your credit score then read this article to discover the benefits of and methods of getting a good credit score which is above the 700 level.

In this article we will look at why having a good credit history is important how to find out what your credit score is if you do not already know, and discuss whether a 700 credit score is good or bad. We will also look at methods that you can use to rebuild and repair low FICO scores. After reading this article you should have a pretty good idea about how these scores are calculated and what you can do to improve them.

• Why having a good credit history is important

These days it is very important to have a good credit history and score. Reports and scores determine whether a lender will let you borrow money at a good rate of interest. If you have a very poor credit history then it is unlikely that anyone will be willing to lend you any money at all, as you will be considered a bad risk to them and they will think that you are less likely to meet your payments than someone with a better history of managing their debt.

If you are thinking of applying for a car loan, mortgage or any credit-card then it is probably a good idea to check out your FICO score and history with the credit reporting bureaus first. If you apply for a loan, mortgage or credit-card and get turned down, this enquiry on your report can be seen by other lenders and may put them off lending money to you as repeated applications can harm your FICO score.

• How to find out what your credit score is if you do not already know

If you do not know what your credit score is then you can find it out by applying to the credit bureaus. These credit reporting agencies are Experian, TransUnion and Equifax. They are obliged to provide you with one copy of your free credit report every 12 months. There may be a charge for them to provide you with your actual credit score though. This FICO score may be slightly different with each credit reporting agency.

You should also be aware that lenders may calculate your credit score differently to the credit reporting agencies. When you request your credit score from either Experian, TransUnion or Equifax they will only take into account your personal credit history. If you are financially linked to another individual who has a poor credit history then this may not be apparent from looking at your FICO score as provided by the credit bureaus.

If for example you have a joint bank account with your husband or wife and they have a poor history of managing debt, then this may reflect poorly on you, and you may not find it as easy as you might think to obtain loans.

• Is 700 A Good Credit Score?

A 700 credit score is quite good. A FICO score over 700 is very good, but anything below the 700 mark is not so great. The typical range of values that credit scores can be is anywhere between 350 and 850, these figures are quite extreme though, 700 is fairly typical. The chances are that if this is your FICO score that it can be improved. If you have a score of 620 for example, it could definitely use some work. Let us take a look at some methods that you can use to get your FICO score over 700 or even higher. Any work that you do to improve your credit score is well worthwhile and will result in you being able to get a loan at a better interest rate and lenders will be more inclined to want to do business with you.

• Methods that you can use to improve and repair a FICO score

Try to repay any loans or credit-cards that you have on time each month. If you are struggling to meet your payments then contact the lender and they may be able to work out an easier way for you to clear your balance, such as extending the loan over a longer period. Always pay your household utility bills on time. Try not to miss any payments at all. Request your credit report from the credit bureaus and dispute any errors that you find on it. This will get any mistakes deleted from your report.

If you are able to pay off any loans or credit cards then do so, but do not close the accounts. This is because lenders often calculate your score based on how much debt you have compared to the total amount of money which you have available to borrow.

In conclusion, if you have a 700 credit score it is actually quite good. This does not mean that you cannot improve on it and make yourself a more attractive prospect to consumer credit lenders such as banks and credit card companies. If you do decide to get your credit score over 700 then make sure that you follow a proven system which if successful, will open up the possibility of you being able to borrow money at a good interest rate. This is something that you can do yourself and there is no need to employ anyone else to do this for you.

You certainly should not employ the services of any credit repair companies which claim to be able to improve your situation instantly. Getting and improving on a 700 credit score is something that you can do yourself quite easily. All you need is a step-by-step blueprint which provides you with all the information that you need to know. There is one such step-by-step method to raise your credit score which I recommend.

Do you want to learn how to eliminate debt, delete late pays, judgments, default accounts, inquiries, and bankruptcies from someone who boosted his FICO score 135 points in 37 days? Click Here Now [http://www.37daystocleancredit.info] To visit 37 Days To Clean Credit Do you want to learn how to repair your credit? Visit How To Raise Your Credit Score [http://www.howtoraiseyourcreditscore.org/] now to find out how easy it is.

Article Source: http://EzineArticles.com/expert/Chris_Jollife/530604

You Should Know - Credit Score Penalty System

You Should Know - Credit Score Penalty System

Understanding the credit score rating system is of the essence for anyone who uses or wishes to establish or restore credit. And you don't have to know all the intricacies that go into calculating your score; just the basics will do.

The basics of the credit scoring system are not that difficult to understand. This information used to be a closely guarded secret until an act of congress forced Fair Isaac, the creator of the most used credit scoring model, to disclose it. Previously, consumers were forced to fly in the dark, as it were, on something that has such a great impact on their lives.

Defined in simple terms, your credit score is a three digit number that indicates your creditworthiness. Needless to say, a lower score indicates bad risk and a high score indicates good risk.

The patriarch of credit scores is the FICO score as it is the one that most creditors use. And though you typically will get this score when you apply for credit, not all credit bureaus supply it directly to consumers. Only two companies can supply you the real FICO credit score.

The FICO score was created by Fair Isaac Corporation and as you might have guessed, the name FICO is actually an acronym of its creator. It is a number between 300 and 850.

There are pretty few people on either extreme of the score. Most people fall somewhere in between. And it is okay to attempt to attain the perfect score, 850, but it is not all that important and could cause you unnecessary stress. What really matters is the range you are in.

A score of between 720 and the maximum 850 used to be considered prime. But after the mortgage meltdown that started somewhere in 2007 and the ensuing credit crisis the bar was raised. You now need a score of at least 740 to 750 (depending on who's looking) to be considered for the best interest rates in loans, credit cards and other forms of credit.

• How is your credit score calculated?

Most of the details of the credit score rating system are still closely guarded secrets. But the basics, which suffice for the average consumer, are as follows:

• Your payment history accounts for 35% of your score: A good payment history over a lengthy period of time is what counts here.
• You debt to credit ratio accounts for 30%: Maxing out on your revolving credit (such as credit cards) is not a good thing. Fair Isaac considers what you owe on each account as well as in total.
• Length of your credit history (15%): The longer your history, the better. This is the reason you should start building credit as early as possible, even after a bankruptcy.
• Variety of accounts (10%): A "healthy mix" of types of credit is desired. Also, riskier types of credit such as credit cards often score lower than mortgages, car and school loans.
• Number and of accounts (10%): Too few credit accounts can hurt your score as can too many. Applying for new credit frequently can hurt your FICO credit score as it indicates risk (you appear desperate).
• You should also be aware that your credit rating will differ with each bureau. This is mainly because different creditors report to different bureaus and therefore each bureau's data can differ from one of or both the twos'.
• As if to add more confusion to the whole credit score rating system, each major credit reporting bureau refers its score by a different name. Equifax calls theirs the BEACON score, Transunion calls it the FICO Risk Score and Experian calls it FICO II.

You are not done with the credit score-naming mumbo jumbo just yet. FICO also created what is known as the FICO Expansion Score. This was created for people with scanty history such as recent immigrants. This score considers nontraditional credit data such as utility information and public records.

Think you're done? There is the Vantage score and Next Gen score and more (plus more coming as the credit reporting system continues to evolve).

To avoid the confusion about the credit score ratings system, just go for the score that most creditors use, which is the FICO score. It is worth to repeat that only two entities supply this score directly to the consumers and not all the credit reporting bureaus do. Also, your score does not come free and if it does it is with other strings attached.

Where can you get your real FICO scores from all the major credit bureaus? Find out now at FICO credit score [http://aboutcreditandrepair.com/credit-reports/credit-score.php]. David Kamau offers free self credit repair [http://aboutcreditandrepair.com] tips and strategies at his site and blog.

Article Source: http://EzineArticles.com/expert/David_Kamau/44792

10 Credit Score Facts and Fictions, Thats True ?

10 Credit Score Facts and Fictions, Thats True ?

If you're a fan of TV's "Mythbusters," then you may already know the truth about many popular fictions - like how a heated Jawbreaker can explode when you bite into it, or that a home ceiling fan cannot decapitate you, or that your toilet seat is the cleanest surface in your house. While these are fun myths to debunk, knowing the facts of these fictional stories probably won't affect your personal finances.

What can impact your wallet is what you know - and just as importantly, what you don't know - about your credit score. Your credit score is a three-digit numerical representation of your credit-worthiness, or how likely you are to reliably pay back money you borrow. It may seem simple enough, but credit scores aren't always intuitive. Even when you think you're doing the right thing financially, you may be actually hurting your score.

When it comes to credit, knowledge is power. Here are the real facts behind 10 common credit score fictions:

Fiction: The more money you make, the better your credit score will fare.

Fact: Your income has nothing to do with your credit score. It's not reported to the credit bureaus or listed on your credit report.

Fiction: Once you've paid a past-due debt, it will drop off of your credit report.

Fact: Late payments and other negative information remain on your credit report for seven years from the date of the initial late payment. Bankruptcies typically stick around for 10 years from the bankruptcy filing date. While that black mark may continue to soil your report, however, its effect on your score will lessen over time.

Fiction: Credit bureaus and those reporting to them never make mistakes.

Fact: Nearly eight in 10 credit reports contain a serious error or some sort of mistake, according to a survey by the U.S. Public Interest Research Groups. Because many errors can negatively impact your score, it's important to check your report regularly and dispute any inaccuracies you find.

Fiction: Practicing a cash-only policy will help your credit score.

Fact: Having good credit is a function of having credit available to you and using it responsibly. If you don't have or use credit, you may have no credit history at all and if you do, your score won't be as good as someone who consistently demonstrates responsible use of credit over time.

Fiction: All credit reports and scores are the same.

Fact: You have three main credit reports - one from Experian, Equifax and Transunion - plus a variety of credit scores. The information listed on each of your reports may vary, and your scores - even if based on a single report - may also vary. No one report or score is better than the others. They all seek to document your credit history and assess your default risk.

Fiction: How responsibly you manage your checking, savings and investment accounts will impact your credit score.

Fact: Like income, your checking, savings and investment account activity is not reported to the credit bureaus and does not affect your score.

Fiction: Closing credit card accounts will help your credit score.

Fact: When you close a credit card account, you may be affecting your "credit utilization," which is simply how much credit you use (balances) compared to how much is available to you (limits) - the lower, the better. Closing a card lowers the amount of credit that's available to you, which may increase your utilization percentage if you maintain balances on any of your other cards. A higher credit utilization may negatively impact your score.

Fiction: Pulling your own credit report will lower your credit score.

Fact: When you pull your credit report for your own educational purposes, it's considered a "soft inquiry" and will not affect your credit score. On the other hand, when a creditor or lender pulls your report for the purpose of extending you credit or a loan, it's a "hard inquiry" and may negatively impact your score.

Fiction: If a bill or debt isn't generally reported to the credit bureaus, missing a payment won't affect your credit score.

Fact: Any time you pay a bill late or don't pay at all, that activity can be reported to the credit bureaus. Different companies have different policies about reporting late payments or negative information, but never assume that just because you've never seen a particular bill listed on your credit report that it can't negatively impact your credit score if you don't pay it.

• Fiction: Disputing accurate information will remove it from your credit report.

• Fact: You can only dispute information on your credit report that is inaccurate. When you dispute information on your report, the credit bureau has 30 days to investigate. If it finds the dispute to be valid, it will remove the inaccurate information. If, however, the dispute claim is found to be false, that information will not be removed from your report.

For more tips and tools to help you manage your home, money and credit - all in one spot - visit Quizzle.com. At Quizzle, you'll get a totally free credit report and free credit score, no catches, no trial subscriptions, no credit card required. For help improving and protecting your credit, check out Quizzle's Credit Personal Trainer and credit monitoring services - you won't find a better deal anywhere!


 http://EzineArticles.com/4666777

Is the Credit Score And Influential in Business Value

Is the Credit Score And Influential in Business Value

Why should you care?

It costs you money. A bad credit score can:

increase the cost of your business insurance premiums
raise the interest rate on your business credit cards
prevent you from leasing an office or warehouse space
stop you from leasing equipment or raise the lease rate you pay
keep you from getting the business credit lines you need to build your business
What's the difference between a credit report and a credit score?

There are three major reporting companies: Equifax, Experian and TransUnion. These companies track financial information from public records and a wide variety of financial sources, mortgage lenders and collection agencies. Your credit report is a detailed list of this information which each one of these companies compiles from your creditors and other public records. A credit score is a numerical computation that is based on the information contained in each of your credit reports. Each company calculates their scores independently and, since they each have their own proprietary formula, your actual score may vary from company to company.

• What's in a credit score? There are five factors that contribute to your credit score: 

Payment History
Outstanding Debt
Length of Financial History
Amount of New Credit
Types of Credit Used

1. Payment History

Payment history accounts for approximately 35 percent of your credit score. Payments made on time and in full have a positive impact; late payments, financial judgments, bankruptcies or charge-offs have a negative affect.

2. Outstanding Debt

Approximately 30 percent of your credit score is based on the amount of your outstanding debt. There are several calculations that come into play here:

the ratio of the total debt outstanding to total available debt
the ratio of the total balance outstanding on each individual credit obligation to the amount available on that loan or credit card
the number of accounts that have balances
the amount owed on different types of accounts, e.g., credit cards, installment loans or mortgage debt.
Paying down balances is an important way to improve your score. Keep balances on individual cards below 30 percent of your credit limit when possible. And always avoid reaching or going over the maximum credit limits on any debt obligation or credit card. It's quirky, but your credit score will be better if you spread a balance around on several credit cards rather than maxing out one credit card: Putting $2,500 on each of 3 credit cards with $10,000 credit limits each will be better for your score than putting the $7,500 on one card with a $10,000 limit. The overall amount owed doesn't change, but the way it's perceived by the scoring models does. Obviously, the best thing to do is pay all debt down as soon as possible and not make any late payments.

3. Length of Credit History

The length of time you've had credit counts for approximately 15 percent of your score. Generally, the longer your credit history the better, as it allows lenders to see how you've handled your debt obligations over a period of years.

4. Amount of New Credit

New credit applications and new credit accounts represent approximately 10 percent of your score. Opening multiple new credit accounts in a short time period can hurt your score. So be careful about balance transfers onto new cards and those 10% discount offers for opening a new credit card with retailers. Opening new accounts to get the store discount can cost you on your credit scores, so don't do it if you're currently in the market for a mortgage or other credit.

5. Type of Credit

The type of credit you have has an approximately 10 percent impact on your credit score. A mix of credit card, auto, installment and mortgage debt is positive. A concentration of only credit card debt is not.

Helpful Hints for Improving Your Score

Check your credit reports at least once per year and contact the credit reporting agencies to correct anything that's wrong.
Don't lower your credit scores by opening a number of accounts in rapid succession.
If you are rate shopping for a mortgage or car loan, try to do it within a short period of time. Credit scoring agencies try to distinguish between comparison rate shopping for one mortgage or car loan, and looking for multiple new credit lines or credit cards.
Closing an account doesn't make it go away on your credit report. By closing an account you lower the overall amount of credit you have and this can negatively impact your score.
Pay your bills on time - those hefty late payment fees add up and late payments can really hurt your credit score.
Summary

It's very important to check your credit report regularly and correct any inaccurate information. Get a copy of your free credit reports from each credit reporting agency annually and take the time necessary to correct any problems you find. Many issues can be addressed through the companies' websites after you have obtained the credit reports. Or follow the instructions on the sites and handle it in writing.

Connacht "Conny" Cash is a Certified Financial Planner professional, author and speaker on business and finance topics. More small business resources can be found at http://www.AskConny.com Check out her blog at http://bit.ly/askconny

Article Source: http://EzineArticles.com/expert/Connacht_Cash/52282

Managing Credits Forms and Maintains High Credit Scores

Managing Credits Forms and Maintains High Credit Scores

Many of us remember our fathers or grandfathers commenting on the use of credit to achieve our purchases as something close to blasphemy. In decades past the prevailing attitude in middle class America was "if you can't pay for it, you shouldn't buy it". In today's complicated social and economic environment, maintaining a good credit score has become critical to home, family and the capacity to function effectively in everyday life in general. It is not just about the means to finance purchases but empowers employment opportunities, social status and financial management as well.

Exactly how the credit bureaus (Experian, Trans Union, and Equifax) actually calculate credit scores is a mystery to everyone. They each have their own proprietary formulas that seem to be beyond ordinary understanding. Although the bureaus do not disclose their formulas they are forthright in providing succinct information regarding maintaining and improving scores and information on how credit patterns affect scores. The following are a few tips on maximizing credit scores.

• How credit reporting works

The consumer should understand that the bureaus only evaluate accounts that are reported to them by the consumer's creditors. If a credit account is reported to Experian and Equifax but not Trans Union it will not be reflected in the Trans Union credit score. This is the primary reason there is frequently a considerable difference in scores between repositories (bureaus). When consumers apply for credit the creditor may rely on any of the three bureau scores or all three as with a mortgage application. It is therefore important that a score substantially lower than the other two be reconciled with the repository. Frequently the lower score is a result of credit accounts with a good payment history not being reported to the repository.

• Delinquent payments

Delinquent payments on any consumer account can have a serious effect on credit scores. Delinquent is defined as more than 30 days late. Payments received by the creditor 60 days late and beyond have an even greater impact on the score. Once it is reported, a delinquent payment remains on the consumer's credit record for seven years. However as time passes the delinquent payment will have less impact on scoring if there are no further late payments reported by the creditor.

Credit cards

Excessive credit card accounts, regardless of the payment record can also have a negative effect on credit scores. The bureaus do not chronicle information on salary, job stability or anything directly related to income. A consumer with more than three credit card accounts raises the red flag of potential escalation of debt even if the cards are not used. Credit history is also an important factor in scoring. Accounts with a sustained good payment record should not be cancelled. Instead, one should cancel the newer credit card accounts since they have less influence on the score.

Accounts that have a high balance owed or are approaching the credit limit have a significant impact on credit scores. Transferring a portion of the balance owed to another credit card with a zero or low balance could improve the score but the best solution is to secure a relatively low interest rate bank loan to pay off high interest rate credit card debt.

• Cosigning loans

Parents want to help their siblings establish credit but care should be exercised on how this is accomplished. Cosigning an auto loan or a credit card application makes the parent just as responsible for timely payments as the person receiving the loan proceeds. If there are delinquent payments, they become an element of both parties credit record. Young adults have limited experience managing credit obligations and are often in cognizant of the consequences of delinquent payments. Payments should be made to the parent who in turn remits to the creditor allowing them as the cosigner to maintain control. This procedure allows the sibling to establish a credit account but only if the creditor agrees to grant the account to the sibling as the primary borrower. Obviously this is a practical approach to cosigning a loan regardless of the cosigner's relationship to the borrower.

• Establishing credit

Absence of credit history is a common reason for low credit scores or rejection by creditors regardless of the score. This is particularly frustrating for young people just entering the workplace and recent immigrants. Since the credit bureaus only chronicle data reported to them, the information available for reporting is limited to credit card, secured loans and consumer retail accounts. Residence rental, utility payments, insurance and similar entities do not normally report to the repositories so the consumer does not receive consideration for these accounts in establishing credit. To receive a valid or generally accepted credit score, creditors are looking for three consumer accounts with a one year minimum payment history. Credit cards are the logical place to start. Credit card companies that will issue a credit card with a small maximum limit for a fee are proliferating on the internet. A debit type credit card where the consumer is required to deposit a balance that can be charged against is another approach to establishing credit card accounts. Loans from friends or relatives with a formal written agreement in place where monthly payments can be documented through cancelled checks or bank statements for one full year are a commonly accepted by mortgage underwriters in meeting the three account minimum for credit approval.

Whereas credit scores in the 760 to 850 range are only achieved by those with years of credit history including many paid accounts establishing a record of successful credit management, with three low balance credit card accounts, an auto loan and possibly one other consumer account an individual can expect a credit score of 660 or higher as long as there is a one year payment history on all accounts and no payment blemishes. A score of 660 represents good credit and should allow access to further credit with favorable terms on home mortgages or in any other credit arena.

A summary of how to establish and maintain a good credit rating can be reduced to one basic rule "use it but don't abuse it".

Want to learn about how defective the credit reporting industry is in America. More importantly, you will learn how to use this to your advantage. This could help you wipe the slate clean and get a fresh start! Visit [http://www.1stchoicefamily.com/agent/mr] and click "Credit Restoration". The education is free and the site offers a credit restoration service that is second to none. They have represented 188,000 clients in 11 years and claim to have "never lost a case".

Article Source: http://EzineArticles.com/expert/Michael_B_Roche/860236

Apply Credit Score?

Apply Credit Score?

When you apply for a loan in order to buy the house or car of your dreams lenders will look at your credit score and they will use it to decide if they should give you the loan or not.

There are lots of Americans who don't know what a credit score is or how it is calculated. If you belong to this group of people, then don't worry because in this article you will learn all these basic concepts that are necessary to start improving yours and to buy the house or car of your dreams once and for all!

• What Exactly is a Credit Score?

A credit score is a number of 3 digits that lenders use as an indicator of your capacity to meet financial obligations such as mortgage payments, car payments, credit card bills, loan repayment, etc. It basically tells lenders how likely you are to pay your debts.

It is usually a number between 300 and 850. The higher the credit score, the less risky you are to lenders. And the less risky you are to lenders, the better interest rates you will get. Also, the higher your credit score is, the more chances you have in getting a loan. Sounds simple right?

A score of 750 or more will give you the best interest rates and the best chance of being approved for a loan. On the other hand, with a of 600 or less you will have a hard time finding a lender who is willing to give you a loan. And if you find it, you will have to pay a lot of money in interest just because of that low score.

That's why you have to improve your credit score as soon as possible (if you have a low one or not):

To avoid high interest rates.
To save thousands of dollars in interest in the long run.
And to get the house or car of your dreams at the lowest cost possible.
Where Does It Come From?

Now you are probably wondering "Where does my credit score come from?" This is a very common question and the answer is simple: Your credit score comes from your credit report.

This credit report is created by the three major credit bureaus in the states and it contains the history of your payments, the amount of loans that you have, how much you owe, and a few other things.

The bureaus use the information contained in your credit report to calculate your score. The three major credit bureaus use the FICO scoring system, which ranges from 300 to 850.

What Exactly is Your Credit Score Made Of?

Your credit score is made of five different parts:

• Payment History (35%)

Payment history refers to the ability to pay your bills on time. It represents 35% of your credit score. Your history is considered the best indicator of your future financial behavior. Late payments, missed payments, loan defaults, unpaid taxes, and the worst of all, bankruptcy, will all hurt your score.

It's also important the amount of negative events and when these events happened. Newer events affects your score more than older ones. More severe events (like bankruptcy) are worse than less severe events. And many events hurt your score more than only a few of them.

• Amounts Owed (30%)

Amounts owed represent 30% of your credit score. It refers to the amount of debt you have in comparison to your credit limits. This is also called the "debt to credit ratio" and it works like this:

Let's say you have $10,000 available and you only owe $3000, then your ratio is 30%. So the formula for the "debt to credit ratio" is: your debt divided by your available. The lower the ratio, the better for your score

Important: If you have a high ratio, don't apply for more available credit to lower it. It will only hurt your score even more so please don't do that.

• Credit Length (15%)

Credit length represents 15% of your score. The longer your history is the better for your score. This is based on the assumption that your past financial habits are likely to be the same in the future. And if you have a long history, the bureaus can see exactly what your financial behavior is.

• New Credit (10%)

The application for new credit represents 10% of your credit score. Every time you apply for new credit, an inquiry is added to your credit report. This inquiry hurts your score, because it tells the bureaus that you are in the need for more money.

Also, taking new credit will bring down the average length of your credit accounts. This is because now the new credit account is taken into consideration to calculate the average length.

• Credit Types (10%)

The types of credit that you have represent 10% of your score. It's good to have different types of credits because it shows the lenders that you have experience managing different credit accounts.

Important: Having different types of credits can help your score but don't go out and get loans if you don't need them. This isn't a significant part in the credit score formula (it only represents 10% of your credit score) so don't get yourself into more debt just to have a better mix of credit.

• How Can I Improve My Credit Score?

Now that you know what a credit score is and where it comes from, the next thing you have to do is to start improving it as soon as possible. The truth is that it won't be an easy task (especially if you have a low one): it will take some time, money and patience but it will be worth it. A few more points could be the difference between buying the home or car that you and your family deserve or not!



Article Source: http://EzineArticles.com/7403660

Credit Score CIBIL in Indian Loans, you need to know

Credit Score CIBIL in Indian Loans, you need to know

Importance of CIBIL Credit Score in Indian Loans:

Your CIBIL credit score is an indication of your financial stability and helps lenders decide if you are an individual worth taking a credit risk or not. Basically, a credit score tells the lender what's the probability of you paying back the loan that you have sought.

Your CIBIL credit score is calculated on your history of credit usage and the way you have handled past payments. If you have been regularly paying off your equated monthly installments (EMIs) and haven't defaulted you have a higher score. If you use credit in moderation, and don't go about borrowing beyond your means, you will have a higher score, which in turn improves your credit rating.

Scores between 700 and 800 are considered to be good, but now lenders are enforcing stricter norms. If you have a score below 650, it is most likely that your loan application will be rejected or you will have to pay very high rates of interest. If you have a score below 600, you won't get a loan.

The lower your CIBIL credit score, the higher is the probability of default. You should access your score at least once in a year so that you get an indication of your credit rating. If you are planning to take a big loan (for example, a home loan) in the next 24 months, then it is advisable that you check your score every six months so that you can improve it and increase your chances of getting a loan.

What will affect your Credit Score?

If you have no credit history, creditors may treat you the same way as if you have had bad credit. This might seem unfair, but the rationale behind is that you have not established a history to show that payments are made over an extended period of time.

Score parameters: The credit score of every person is different and is an evidence to varied credit behavior. The credit score is not a permanent one. It is extremely dynamic and keeps changing as a person changes his financial behavior.

The score is calculated based on the person's credit profile parameters at that point in time. It is important to know that the following parameters are taken into consideration while calculating a consumer's credit score:

Credit Utilization: How much credit is being used? Consistent high utilization of the credit limit is unfavorable, and vice versa, the lower your credit utilization, the better. As it suggests that one is using a small amount of the credit that's been provided to them.

Defaults/Repayment History: how many accounts are due in past - by how many days and by how much value? If you have already taken any loan your payment history is the most important factor that determines your credit score. Regular repayment of loans means you are awarded a higher score. If you have missed payments, delayed or defaulted on payments, your score will be much lower.

Secured versus unsecured loans: If your credit portfolio has a higher percentage of secured loans (auto loans, home loans), your credit score will be higher. If you have a large number of unsecured loans (credit cards and personal loans) it shows bad money management and results in a lower score.

Credit Inquiries: If you have too many inquiries against lending institutions for any kind of credit facility, no matter that you have been granted the loan, it reflects poorly on your credit score. It shows that you are in constant need of funds.

Credit Age/Trade Attributes: How old are the consumer's lines of credit? What type of credit does he have? Does the consumer have a good mix of credit or is it all credit cards?"

• Five Steps Improve Credit Score

In today's time, the need for credit is very imperative. If you have defaulted on your payments for any reason, your credit information report will promptly report it. With a bad credit report, you are unlikely to get any loan or credit card from any bank. However, that does not mean you are scarred for life.

Rebuilding your CIBIL score is a slow process. Follow these simple steps that help you to improve your credit score.

Step 1:

Pay off existing debts. The most effective way to improve your credit score in this area is by paying down your revolving (credit cards) debt. In fact, owing the same amount but having fewer open accounts may lower your score.

Step 2:

Opt for a secured credit card, which is usually given against the security of your fixed deposits. ICICI Bank, HDFC Bank and Axis Bank are the three banks that issue secured credit cards in India.

Step 3:

Go for a Consumer Loan (T.V, Refrigerator, other Home needs) by providing PDC (post dated Cheque) as security and repay the entire loan without any delays.

Step 4:

Go for a personal loan using an asset as collateral or as an unsecured loan. Paying dues towards this loan on time for the next 12-24 months will help in reviving your credit history.

Step 5:

Don't make too many inquiries for more credit cards and loans. Also, abstain from taking huge loans until your score has improved and you are financially healthy.

Usually, CIBIL maintains your credit history for 7 years but displays month-by-month repayment record for the last 36 months. This essentially means that if you are on a clean slate post repayment of your old debts, and promptly pay your new dues and loans, your credit history will start looking up after three years.


Article Source: http://EzineArticles.com/8774693

Increase Your Credit Score !

Increase Your Credit Score !

Credit scoring is quickly becoming one of the most-discussed topics in the mortgage industry and lately it has come under attack by consumer groups and some members of Congress.

Some of the strongest attacks on credit scoring focus on consumers? Seeming inability to change the credit score so as to change a denial into an approval quickly enough to rescue a deal or to keep from having to pay a higher interest rate, since some mortgage loans are now priced according to the borrower’s credit score. Since the score is based on information - positive and negative - in a consumer’s credit report, incorrect information - especially if that information is derogatory as defined by the model - can lead to a lower-than- warranted score. But, with the system now in place, correcting and deleting negative and incorrect information can take weeks, and even after the information is corrected by the creditor in its own files, the creditor often takes weeks more to report, via magnetic tape, the new, more-positive information to the credit repository (of which there are three: Trans Union, Experian - formerly TRW - and Equifax, which dominates here in North Carolina). But congressional, regulatory, and consumer pressure are coming to bear on this cumbersome, paper-based "corrections" system. Recently a credit industry official told me the credit bureaus - which are local that sell reports compiled by the three large repositories and which have the most direct contact with consumers - are negotiating with the repositories to be able to help consumers make changes faster. Under the proposal, the local bureau would check out consumer complaints directly with the creditor and, if the creditor confirms that the information is, indeed, incorrect, the bureau will be able to change the so-called "raw" credit file directly with all three of the repositories without waiting for the creditor to check out the complaint, update its files, and then send the updated information to the repository. A process that, as I noted, can take weeks - long enough to kill a deal. This is a major development. With the raw file changed, a new, possibly higher, score can be quickly generated, a deal rescued, and consumer and congressional concerns can be addressed.

Additionally, the three repositories continue to attempt to cooperate with one another, in theory sharing any updated, corrected information about consumers to insure their files are as accurate as possible. (But, just to be safe, consumers should make corrections with all three repositories directly – don’t assume anything; they are, after all, competitors.) The three repositories each use a different version of the Fair, Isaacs scoring model, but the model has been adjusted and weighted, so, theoretically, if all three had the very same information on you, your three scores would be identical. (A score of 640 at one repository would represent the same odds as a 640 at either of the other repositories, according the Fair Isaacs.) Of course, not all creditors report to all three repositories, so, even with adjustments, consumers can sometimes end up with three quite-different scores. While it is true that, in theory, you can have great credit with one repository and bad credit with another, I have rarely, if ever, seen that happen, although I have seen some pretty wildly varying scores. In a few cases I have seen borrowers with scores that vary by 100 points or more. To combat this variance, the mortgage industry usually uses the middle score, but that can be of little comfort to a borrower if he/she has scores of 550, 570 and 700, and the interest rate for a borrower with a 570 score is two points higher than for a borrower who has a 700 score. Still, keep in mind that this situation is rare. A borrower with good credit would, for example, have scores something like 685, 702, and 710.

Other new developments include outreach efforts to educate consumers about credit scoring by conducting seminars and sending out publications on the subject, plus efforts to make scores more readily available to consumers. Federal law says consumers do not have a right to see their score, but does not specifically prohibit lenders and creditors from revealing it (the credit report you can purchase from your local credit bureau does not have your scores posted - for now, only reports ordered by creditors have scores). Many in the mortgage industry, who know just enough about credit scoring to be dangerous, wrongly believe they are not allowed to tell you your score. That may be their company’s policy, but the Federal Trade Commission has made it crystal clear that it is illegal to reveal scores to a consumer, and some industry and consumer groups are now coming out in support of release of the scores. I strongly support the release of scores to consumers, so long as the scores are accompanied by information about how the scores are computed (my columns work nicely, I would think), so a number isn’t just shoved at a consumer with no context or explanation.
In fact, until recently, Fair, Isaacs has opposed the release of the score to the consumer, fearing that, as the company told me in an e-mail, since "the nature of credit risk scoring requires that consumers behave normally (and therefore predictable) when managing their credit and if large numbers of consumers receive and misunderstand their credit risk scores, their short-term behavioral changes could harm the predictive accuracy of the scoring model." Fair, Isaacs position is that "the expansion of the credit industry in the 80s and 90s (was) made possible by expanded use of tools like credit scoring," so anything that hurts the "predictive accuracy" of the model could make credit less-available. I would acknowledge that some might say that making credit less available is a good thing!

So, you might be wondering, just how is a score generated? A California-based company called Fair, Isaac http://www.fairisaac.com has created a complex, proprietary mathematical algorithm. By "back-scoring" millions of credit files using thirty-three or more "variables" that are grouped into five categories, from which your credit score is computed, and then analyzing the performance of those files, the company found the resulting score to be an incredibly accurate predictor of future rates of default or late payments. Of those scoring below 600, 1 in 8 would have one or more 90-day late payments. Above 700 that number slipped to just 1 in 123 and above 800 only 1 borrower out of 1,292 would have one or more 90 day late payments.

The five categories found to be more predictive (with their relative weighting in parentheses) are:

• Past Payment Performance (35%): Do you pay your bills on time? The more recent the late payments, the lower you credit score. In fact, a 30 day late payment today hurts more than a bankruptcy five years ago.

• Credit Utilization (30%): Have you maxed out your credit lines? Low balances on a few cards are better than high balances on one or two cards. Keeping balances below 30% of the credit line increases your chance for a higher score.

• Credit History (15%): The longer your accounts have been open, the better, so surfing for a new lower rate on a credit card and transferring balances can hurt your score.

• Types of Credit In Use (10%): Getting a loan at a finance company rather than a bank or credit union lowers your score.

• Inquiries (10%): Applying for new credit lowers your score, but multiple inquiries from the same type of creditor - like mortgage companies or car dealers - within 14 days count as only one inquiry. Promotional or administrative inquiries do not count against the score - only those times that you applied for credit count.

It’s no secret that Fair, Isaacs isn’t happy about the relative weightings leaking out, and it contends that the relative ratings above are not necessarily correct. The company, in an e-mail, to me "...the numbers change over time. That’s why we periodically update our models and scorecards to account for changes in consumer behaviors, lender policies, etc." Well, then, now that we know how a score is computed, how do you go about improving it? Certainly the best way is to pay your bills on time. You should also keep your balances to below 30% of your credit line, and its better to keep some small balances on several cards rather than high balances on one or two. Maintain your accounts for a long period of time. Limit the number of times you apply for credit.

What if you have done all that and there is incorrect derogatory information on your report? Challenge it quickly with the help of a mortgage professional, and insist the creditor correct the information promptly. It can’t hurt to check out your credit report with a mortgage professional a few months before you intend to apply for a mortgage. But, in any case, with the increasing amount of identity theft occurring, you should check your credit report at least once a year anyway.

For more information on credit reports and credit scoring, see my article last month and go to the following websites: http://www.creditscoring.com, http://www.ftc.gov.com, http://www.homepath.com and [http://www.fairisaac.com/consumer]. At http://www.namb.org the site of the National Association of Mortgage Brokers, you’ll find two of the best brochures I have seen on the subject - one for consumers and one for mortgage professionals. They were just released recently; you can also find message boards on the subject, and a lot of other sites that deal with credit scoring, by entering "credit scoring" on any of the search engines. Once a year you can get a free credit report from: http://www.annualcreditreport.com.

If you are having problems with your credit go to my article "Reestablish your credit". You’ll find some helpful hints. If you have any questions please feel free to call me: 952-345-7664 or Cell 612-597-6645 or Toll Free at 800-425-5150, ext. 7664.




Article Source: http://EzineArticles.com/237984

Tips to Improve Your Credit Score Value

Tips to Improve Your Credit Score Value

Unless you've already got a very high credit score, one in the 800 range or better, you need to know how to fix it. Your credit score follows you around like a lost dog looking for a home, and can not only get you the financing you need for a home or car, but can get you the best rates too. To top it off, your credit score helps control how much you pay on everything from credit to life and car insurance. As such, your credit score is one of the most important numbers in your life except for maybe your blood pressure and cholesterol, and a low credit score can raise your blood pressure to unhealthy levels.

These days your credit score is vitally important. That's true not just when trying to get credit, as in the past, but for many more mundane parts of your daily life. One are where credit scores are used extensively is in the insurance industry. Many service providers, such as insurance companies have found they can correlate risk to your credit score with a fairly high degree of accuracy. You know what that means; as your credit score falls, your insurance rates rise.

Another area that you may be aware of where your credit score can make a big difference is the rental market. You may find yourself hard pressed to rent an apartment with an abysmal credit score. In some tight rental markets, your score doesn't even have to be all that bad. If the market is tight, landlords can afford to be more selective, and one of the criteria they'll use to help select renters is their credit score. Experience has shown that, as with insurance, there is a correlation between the reliability of a renter and their credit score. The lower the credit score, the more the landlord has to worry about.

On top of all these other things, a low credit score will of course make it more expensive to get credit of all kinds; from auto loans to mortgages. With the recent shakeup in the sub prime mortgage market, prospective borrowers may find it difficult to secure a mortgage if their credit score strays too low.

Given the disaster that is a low credit score, if yours is low, you'll probably be looking for ways to fix your credit score. It is possible to fix your credit score, and there are some basic techniques you can use to do the fixing. First and foremost you should order a copy of your credit report from one of the three major reporting agencies; TransUnion, Equifax, or Experian. You are able to order one report free of charge each year from each of the agencies. You should stagger them so one will arrive approximately every three months. You'll use the first one as a baseline so you'll be aware of any future changes.

Once you receive your free credit report, set about poring over it thoroughly so that you can determine if there are any errors. It's not at all uncommon for credit reports to contain mistakes. In fact, according to recently published estimates, between 20 - 25% of credit reports have mistakes that can affect your credit score. Sadly, it's usually for the worse. If you do find any mistakes, you'll have to contact the creditor and the reporting agency to get them cleared from your report.

Once your credit report is accurate, you'll want to raise your score as high as possible so you can get the best interest rates and other credit terms. First of all, there are some things you don't want to do if you're aiming to fix your credit score. The most important thing not to do is pay your bills late. Late payments, especially those over 90 days, are disastrous to your credit score, so avoid them at all costs. In fact, your credit history is the most influential component of your credit score. It should go without saying, but keep accounts out of collection. Collection actions can follow you around for 7 years, and obviously have a negative impact on your credit score.

Your credit score is views recent credit history more heavily than your activity farther in your past, so if you've had a few fairly recent late payments, simply waiting for a year or so while continuing to pay your bills on time will raise your score too. After the late payments are approximately 24 months behind you, they will not have the same impact on your score.

If your balances are high, simply paying them down can have a dramatic, positive effect on your credit score. Reducing high balances on revolving accounts will go a long way toward fixing a low score. This has an effect on 2 key components of your score; credit utilization percentage and total outstanding debt. Together, these 2 factors account for about 40% of your credit score, so you can see how optimizing them will help fix your credit score. The credit utilization score indicates someone's available revolving credit as a percentage of their total revolving credit. For example, if you have 4 credit cards with limits totaling $20,000, and you owe $10,000 on them, you have a 50% credit utilization score.

Something else that is affected by high balances that's not actually part of your credit score, but does affect you ability to get a mortgage is your debt to income ratio. Although your amount of total debt is a very large part of your credit score, the actual debt to income ratio isn't. Typically, lenders want to see both a high credit score and a total debt to income ratio of less than 36%. They'll use these when calculating how much home you're able to afford, and if they'll extend financing to you at all.. In the opinion of many financial advisors, 36% is way too high and leaves precious little room for error down the road. A figure of 20 - 22% is a more conservative number many experts are far more comfortable with.

Other things that are used to calculate your credit score are the length of your credit history and the number of recent credit inquires by prospective creditors. The length of your history can be fixed by simply waiting for a period of time after you have opened your first credit accounts. That will lengthen your credit history.

Credit inquires by creditors are known as "pulls" in the credit industry. There are 2 types; hard and soft. You need to be concerned only with hard pulls. They are generated when a prospective creditor checks your creditor. That happens every time you apply for credit, weather it's for a store card, a major credit card or a car loan. Every one of these will lower your credit score by about 5 points for 6 months, so if you're going to be financing a car or getting a mortgage in the near future, do not apply for other credit. The exception to this would be if you have no credit at all and are trying to establish a credit history before applying for your loan.

If you know you'll be financing a vehicle or getting a mortgage in the near future, a little legwork on your credit score no could save you big money for years to come. So, stay away from late payments, but almost as important, you must keep you debt at manageable levels.

The average American has over $8,000 in credit card debt. In today's society, it's essential that your credit score is as high as possible. Not only will a high credit score allow you to get the financing your need such as mortgages and car loans, it will literally save you thousands of dollars doing so. For special strategies to fix your credit score, go to the fix your credit score guide.

Article Source: http://EzineArticles.com/expert/Steve_Faber/3824