Facts About Credit Scores

Facts About Credit Scores 

To people who are not familiar with the term credit score, they often assume that this is the score that we get in our credit cards for the number of purchases that we have made every year. But nothing is further from the truth.
Credit scores are actually the grade that you get depending on how reliable a person is in paying their debts and credits.

Credit scores are determined by a lot of factors, how much your outstanding debts is, how regular do you pay for it, how much you spend and how much you earn. It will also be determined by your past credits and how were you as a borrower. These are all being gathered and recorded by credit bureaus and credit reference agencies like Equifax, TRansUnion and Experian.

So if you think, you are the only one who knows that you owe a credit card company a big amount, think again because they do keep records and what is more, all the credit transactions that we get are being filed for future reference of every credit and financial institution in the country. 

Credit scores is important because it can mean being accepted or rejected for a loan. With a really bad credit score, you may not be able to get a house loan, a car loan, a school loan and even a credit card. In short, with a bad credit history, your days of borrowing money is history. As an added salt to the injury, it is not only credit card companies, lending companies and banks that do get information from the credit scores. 

Even private companies and government agencies use this to background check a current employee or a potential employee. You see, a credit score will determine a person’s financial savvy and sense of responsibility. This will also show just how much a person is willing to face up to a problem instead of running away from it.

This is especially true with employees that are being hired or were hired to assume posts that deal with really sensitive financial issues or those who are directly in contact with money. A credit history and a credit score is important in determining if they will be able to handle the finances well.

Mobile phone companies and credit card companies also use credit scores to determine the clients that they should target. People who have good credit scores are often those who have the spending power. Thus, they are good people to offer mobile phone packages and credit card services.   

In securing a loan, credit scores are also used in determining the kind of loan that will fit your credit profile. People who have high credit score are given higher amounts in loan, lower interest and longer time frame in which to pay the loan.

In contrast, people who do not have a good credit score may be refused a loan or at the very least be given a small amount in loan, much higher interest and shorter time frame to pay the loan. This is because credit card companies and lender also want to protect their interest. Low credit scores are more riskier and therefore warrant higher interest rates. 

Credit scores can be purchased through the internet via Equifax. They will send you your FICO (Fair Isaac Corporation) score for a fee, $12.95. 

Credit Score Ratings

Credit Score Ratings 

When you apply for a job, the employer will do a background check before hiring you. Banks and other lending institutions do something similar to make sure you can pay for the loan by looking at your credit score ratings. 

The credit score rating is used not only in United States but other countries as well. How they call it and the figures they use may be different but it is designed to do the same thing. 

How this is computed depends on different factors such as the amount of your outstanding loans, the length of your credit history, the types of credit you have used and any new credit. 

Each of these factors has a certain percentage so your credit score rating could be from 350 to 750. 

People who have a good credit score rating will be able to apply for a loan at a low interest rate. Those who are in the red will have to pay at a higher interest rate or have to face the fact that their request has been disapproved. 

You can get a copy of your credit score rating by asking for a copy from an accredited agency. These are namely Expedia, Equifax or Transunion. If you browse through their website, you can already see it after you fill up the fields on the screen. 

But what if I have a poor credit score rating? The good news is that you can change this but you will have to cut down on your expenses so the money saved can be used to pay off your debt. 

Sacrifice on your part may mean only going shopping to buy the essentials such as food, clothes and gas. 

You will have to forget about buying any luxury items or going to the spa for a while since these are just unnecessary expenses. 

If you have more than 2 credit cards, pay them off and then cancel them. A good idea will also be to go around with only one card in your wallet and the other at home that will only be used for emergencies. 

People who are in deep financial debt will probably have to sell some valuables to prevent the debt from getting bigger due to interest. 

If all else fails, you should get the help of a financial advisor to come up with a plan.

There are also a few companies out there that can help improve your credit score rating to what is known as debt relief or consolidation. This looks good in the short term but it does not make things any better. 

When the debts have been paid, this is the only time that you can breathe easy. You can give your credit score rating a boost by applying for a new credit card by getting one offered by supermarkets and groceries since they offer low interest rates to card holders. 

By paying debts on time, you will be able to see a significant improvement in the credit score rating this year compared to the year before which just goes to show that with a little sacrifice and work, this problem can be overcome.

As for those with good credit score ratings, keep up the good work because paying for what you purchase and borrow will allow you to do this again in the future without any problems. 

A Good Credit Score

A Good Credit Score

What is credit score? It is a three digit number that tells creditor whether you can avail of a loan at a high or low interest rate. If your credit score is very low, there is also a possibility that your application will be disapprove.

Naturally, you don’t want that to happen and this can only be achieved if you have a good credit score.

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

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

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

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

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

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

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

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

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

What Is Considered a Good Credit Score

What Is Considered a Good Credit Score 

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

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

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

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

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

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

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

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

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

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

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

Understanding What a Credit Score Is

Understanding What a Credit Score Is 

You just want to get a loan and suddenly you are bombarded with all this questions about your credit score. And you don’t really know what to answer since you don’t even know what a credit score is. 

A credit score is your credit grade, representing how much of a good creditor you are.
This score is dependent upon your credit history and credit report information, which is gotten from credit bureaus and credit reference agencies such as Equifax and TransUnion. Banks, credit card companies and lending companies use the credit score to have an idea if a person will pay what they borrowed in time. These scores will help these companies calculate their risk and determine if you will be lent to or not.

Another use for the credit score is to determine how many percent interest rates will be given to the borrower and what will be the terms of payment. People with high credit scores will be given more time frame to pay their debts and much lower interest rates.

A person with a not so good credit score may be given shorter terms in their payments but high interest rates. This is because they are riskier to lend money to so the banks and lending companies would want to get a high interest from them at shorter periods of time. 

Because of the importance that credit score information gives to companies, banks and lending companies are now not the only ones that use these information. Even mobile phone companies, insurance companies, and private companies also use this information to check on the background of their clients and potential employees and see their character. 

There are actually a lot of ways to determine what a person’s credit score is. One of the most popular is the FICO score which was created by Fair Isaac Corporation. FICO is being used by lenders of mortgages to determine which borrowers are likely to default on their payments. A FICO credit score can range from 300 to 850. 

When before only financial institutions have access to their credit score, now it is being commercialized. Equifax is actually offering consumers a glimpse of their FICO score through their website for a fee, $12.95. The same goes with other credit bureaus such as TRansUnion and Experian but what they are offering is not the actual FICO score but their own scores. 

Both companies however swear that their scores are comparable to the FICO scores. Experian charges the same price as Equifax  for their score, $12.95 while TRansUnion charges $9.00 for a credit report that will also have the credit score. This can be purchased by mail, through phone and of course, the easiest course, online. 

Some however do not see the need to buy these things as they are entitled to a free credit report from each of the three agencies. Some states even give a free credit reports within 30 days of being rejected of a credit by a lending institution or when they receive a not so good credit terms because of their credit score. 

The Meaning of A Credit Score

The Meaning of A Credit Score 

A credit score is not the amount of purchase that you incurred with your credit card and neither does the term refer to the points that you save for every purchase that you make with the credit card. This is not the meaning of a credit score.

Although it does involve credit per se, it does not only refer to credit cards but to credit in general, or in more common terms, a loan. A credit score is the numerical product of your credit history, from the loans that you incurred in college to the purchases that you make with your credit card. All are being recorded and filed under one credit history that can come back and hunt you if you are not careful. 

A credit score is used by banks and lending companies to make decisions on your loan applications. With a not so good credit score, you may get rejected for a loan or if you are lucky will be given a fraction of the amount that you are asking, for a higher interest rate and a shorter payment period.

A credit score, you see, determines whether a person is reliable enough to be given the money to as a loan. For although, they will be earning from you through the interest rates that they put on the loan, banks and lending companies are still cautious because they do know that they cannot just lend their money to people they don’t know if able to handle money. 

A credit score depends on a lot of factor. One of which is your reputation as a borrower. Are you always late in your payments for your credit card? Are you always knee deep in debt because you cannot seem to get around to paying each one until the interests were just too high?

Do you have maxed out credit cards? Have you had any other credit or loan that you have paid for or are still paying? How many are they? Have you had any problems paying for your loans? These will figure in the credit score that you will have. 

Other considerations that make up your credit score is income that you are receiving currently. People who have high income are generally perceived as someone who can handle a loan. Another factor besides the ability to pay factor is the amount of debt that you have. If the bank feels that it is too much debt for one person, they can easily reject your application. 

There are many ways to get a credit score. The industry standard is the FICO score, named after its creator Fair Isaac Corporation. FICO score is being used by credit reference agencies, that will gather the materials about your credit history and then determine from their the credit score. Some use their own scoring systems that are comparable with the FICO score. 

The FICO credit score can now be determined by purchasing it over the internet through the website of credit reference agency, Equifax. The fee is $12.95. The other two credit agencies, TransUnion and Exparian are also selling their own score for roughly the same amount although TransUnion packaged it with their credit history report that people can purchase online. 

So now you know what the meaning of a credit score is? Let’s hope you will work on your own credit score. 

Improving Your Credit Score

Improving Your Credit Score

There are many things that you need to know on how to improve your credit score. This is especially useful and valuable if you wish to get the best deals on the various credit options that can be offered to you. A high credit score can ensure you that at least your credit applications have higher chances of getting approved.

A credit score can help lenders decide if you are good enough to extend credit to in terms in your ability to pay it off on time. Credit institutions are involved in a business where they aim to earn from the money that they lend as credit to borrowers. Providing the credit to people who are responsible enough to pay them on time would serve their best interests. And for them to determine who these people are, there is the individual's credit score to tell them.

A credit score is a calculated score based on a designed formula that would help lenders determine your credit risk. Your credit score would tell them if you have a good record when it comes to managing or handling your previous debts. Through your credit score, they can have a good assessment on how their decisions when it comes to approving or rejecting credit application would be made.

You would need to maintain a high credit score if you wish to be considered an attractive prospect the next time that you apply for credit. Lenders look for borrowers who they think would be able to pay back the money that they lend and so look into the credit score for determining your credit risk. The higher your credit score, the lower the risk and the better the chances that your credit applications would be approved.

There are many things that you can do in order to improve your credit score. One of the first things that you can do is to check your own credit report. The calculation of credit scores is usually based on entries that can be found on your own credit report. Your credit report is a record of your past credit history as well as other pertinent information associated with it.

Credit reporting agencies look into your credit report and, based on the different factors that they can get from it, would then calculate for your credit score. This means that you have to make sure that every entry made on your credit reports is accurate as possible. An error or wrong entry can have an effect on your credit score later on.

One of the best ways for you to improve your credit score is by trying to keep your credit payments on time. Missed payments can greatly affect your credit score. Just being able to promptly pay your debt installments when they're due would help keep your credit score up. If possible, you can also try to pay off balances completely as early as you can. Keeping your balances low can also greatly affect your credit score in a positive way.

If you are trying to avail of short term credit try to make sure that you don't try to open several of them at almost the same time. Having a lot of new accounts on a relatively short period would most likely lower your credit score. The same way goes with availing of several credit cards.

You may want to have a wide variety of credit cards handy so that you may have a better mix of available credit when you need it. But be also aware that doing so may also greatly affect your credit score. That would not work well in your mission on how to improve your credit score.

The Financial Express

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