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Credit Scoring: What You Dont Know Can Hurt You
You've probably heard the term credit scoring. You may have some idea that your credit score can have an effect on your life. For example, you may understand that when you apply for a mortgage, the mortgage company will check out your credit score. But did you know that the interest rate you can get on your mortgage -and on credit cards - will depend heavily on your credit score? Did you know that more and more employers will check your credit score when you apply for a job, and that insurance companies may raise your premiums or even cancel your insurance based on your credit score? So, what is a credit score and how is it calculated? Your credit score (in some cases, it is called your risk score) is a rating of your credit worthiness or how likely you are to repay a loan and how likely you are to repay it in a timely fashion. And it can have a dramatic effect on your life. There are three companies that gather information on how you handle credit. They are Equifax, TransUnion and Experian. They each determine your credit score based on a formula developed by the Fair Isaac Corporation but each calls its credit score something different. Trans Union calls its credit score "Empiraca." Experian calls its score "FICO," and Equifax will tell you its credit score is "Beacon." Credit scores range from 400 to 900 with the average score somewhere around 700. This is one case where higher is not better as the higher the score the greater the risk you are thought to be. What are the factors that make up your credit score? There are five factors that determine your credit score. The first of these is payment history. About 35% of your credit score may be based on how late you have been paying your bills (30, 60 or 90 days). The later you have been, the more negative effect this will have on your score. So will matters that are in the public record, such as bankruptcies and accounts that have gone to collection. About 30% of your credit score will be based on the amounts you owe. If you have, for example, a credit card that is close to its limit, this can impact your score negatively. This means it may be better for you to have a lower balance on several different cards than a large balance on one card. The third factor in your credit score is the length of your credit history. If you have an account that has been open for a long time, this can have a positive effect on your credit score. About 15% of your score will be based on the length of your credit history. About 10% of your credit score will be based on how much new debt you have requested. So, if you recently applied for a number of new credit accounts, your score may be negatively impacted, Your credit score will also depend (about 10%) on the types of credit you already have. For example, if you have loans from finance companies, this can negatively affect your score. Like it or not, your credit score will also reflect your level of education. For example, a college-educated person will be given more points than a high school graduate. How long you have lived in a single location will also affect your credit score - for good or for bad. So will the number of years you've worked for the same employer. The companies that score your credit just plain like stable people. And finally, if you are a homeowner, you get additional points. Is credit scoring fair? It is fair in that it does not take into account personal factors such as your race, gender, color, religion, national origin or marital status. It also does not factor in interest rates you are paying on your credit cards, nor does it include factors such as child or family support obligations or rental agreements. It also does not take into account inquiries about your credit score by employers or lenders that were made without your knowledge, or any information that could be thought of as predicting your future credit performance. What can you do to improve your credit score? Experts in this area suggest that you make sure you pay all your bills on time, that if you miss a payment to a creditor, you get it current and keep it current, and that if you are having trouble paying your bills or cannot pay your bills, you contact your creditors or see a legitimate credit-counseling firm. In addition, you should keep the balance on your credit cards and other lines of credit as low as possible. And if you can, pay off your debt, and not just move it around from credit card to credit card. Do not try to increase your credit availability by opening a number of new credit card accounts. Try to pay off the balance owed on your credit cards every month. The credit information providers (Trans Union, Experian and Equifax) are not required to provide you with your credit score. However, they are required by law to provide you with a free credit report once a year. Moreover, the law requires that you be able to access these reports online. The web site for these reports can be found at annualcreditreport.com.Once you log onto this site, you will be asked to provide several pieces of personal information, including your full name, social security number, birth date, and current and previous addresses ... to make sure you are who you say you are. Douglas Hanna For FREE help with debt and credit, subscribe today to Douglas Hanna's free email newsletter "8 Simple Steps to Debt Relief" at http://www.all-in-one-info.com. MORE RESOURCES:
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GOOGLE SEARCH Simple Identity Theft Protection How many of you bank, shop, or transact other business online? There are at least 4 million Department pf Defense employees that access their pay records online only. Even offline, stored financial data can be placed at risk in computers that are used on the Internet as well. Fixing A Credit Report Fixing a credit report starts with seeing what's on it. You may get access for free online. Credit Card Tips Here are some useful credit card tips for you to consider before applying for a credit card. Before applying for a credit card, you should decide why you want one, and make sure you can use it wisely. 10 Dirty Tricks Credit Card Companies Play The credit card companies make billions each year in legitimate interest charges and fees, but are under constant pressure from the shareholders to increase their earnings. To make this extra money the credit card companies sometime adopt some dirty tricks to make this money. Convenience Can Be Costly You've just opened your credit card bill and attached to your statement you find a "convenience check" included. It may already be filled out with a dollar amount such as $300, $500, or even $1,000. Ways to Look Good without Selling Your Soul to the Credit Card Sharks 1. Buy clothes at thrift stores. Credit Cards - The Top 3 Things You Need To Know Today there are so many different credit cards available, studentprepaid, low interest cards etc. that it has becomes a realhassle to find the right one that will suit your needs. Your Credit Rating and How To Check It There is a lot of confusion surrounding UK credit ratings, credit scores, credit blacklists, credit reports, and credit files. This guide to your credit rating aims to give you the facts you need. What You Need to Know about Debt Negotiation on Credit Cards Debt negotiation on credit cards is often referred to as credit card debt settlement. Whenever you make a credit card payment- or even pay your utility bills- it usually gets reported to one- or all- of the three main credit agencies. Big Brother Knows Whats in Your Credit Report - How About You? Whether you are aware of it or not, credit bureaus have been keeping tabs on you and how you use credit. When it's time for you to apply for a mortgage, credit card, or personal loan, your credit report is what lenders look at to decide to approve you or not. Tips For Getting Your First Credit Card Most of us get a credit card on our name when we go to college or when we are in our senior years of high school and all of us stumble into the same types of difficulties when it comes to finding an issuer and managing the credit card. Most banks ask for a prior type of credit history that most of the time lacks and for some type of warranty that we will be good payers. Comprehending a Credit Report Obtaining a credit report is an excellent way to begin taking control of your financial future. It's recommended that you review your credit report once a year, not only to be aware of your standing with creditors but to also keep abreast of errors and fraud. Finding the Right Credit Card There are so many credit cards out there to choose from that deciding which one to get can feel really daunting. What makes one offer better than the hundreds of others you've seen? Take this little quiz to find out what you should look for in a card. Dont Trade Your Future for Todays DooDads "Easy Low Down Monthly Payment," "Buy Now Pay Later," "You Deserve the Car Today and We Can Finance It for You," & "Spend Today, 0% APR until Next Year!" We see those statements above every where today, on TV commercials, car dealership, banks and magazines. Those statements have put a lot of people into a financial disaster, because the statements make a lot of people believe that acquiring bad debts is an ok thing to do. Building A Credit Report Lenders Will Love You For Will lenders really love you for having a good credit report score? Love is not the right word of course; lenders are after your money, and never forget that. But the lender's representative will love dealing with your credit application if your credit report is good. How Does a Creditor Determine Whether to Grant You Credit? Credit 101How does a creditor determine whether to grant you credit? For many years, creditors have been using credit scores and credit scoring systems to determine if you'd be a good risk for a loan or credit card. More recently, credit scores have been used to help determine what rates you pay for insurance. How To Repair Your Credit Report A credit report is run on a buyer when he or she needs to buy something that will take a long-term loan, such as an automobile or a house. The credit report can come from one of three agencies - Equifax, Experian, and Trans Union. 10 Ways of Reducing the Risk of Identity Theft 1- Check your credit report regularly2- Secure personal information in your home, especially if you have roommates, employ outside help, or are having work done in your home.3- minimize the amount of information someone can steal, do not carry extra credit cards, your Social Security card, birth certificate or passport in your wallet or purse, except when needed. How to Get Credit Reporting Agencies to Help You The process of clearing credit can be laborious and frustrating. Understanding your rights empowers you and saves you time and effort. Credit Card Balance Transfers Explained What is a balance transfer ?A balance transfer can be explained simply as a balance transfer! When a balance is transferred usually from a credit card, but possible from a bank account or loan to a credit card with a offer interest rate (usually 0%) for a set period. It does not have to be the entire amount. |
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