Abigayle Drysdale asked:




What’s a good credit score? That depends upon the reporting agency assessing your history. Some scores are lower than others, depending upon a person’s financial behavior. Some people find the need to increase their scores after a time of lower trending scores. Maintaining and repairing a credit score can take as little as two months, depending on how low your score is.

Pay down all revolving cards. Your overall score may be decreased by late payments, missed payments, or high balances on your cards. Paying credit cards completely off every month can actually cause a lower FICO score while keeping the balances low and paying regularly above the minimum required can help raise your score. Credit cards are excellent tools for credit and should be treated as such.

If your debt is larger than what you earn, your credit score will be lower. Lowering your debt in relation to your income can help increase your FICO score. If you are unsure where your score currently lies, you may check your credit score online with one of the three major credit reporting agencies (Equifax, TransUnion, Experian). Also, you should always choose wisely the credit you apply for. The more checks that are performed on your account, the lower your score will be.

It is not impossible to raise your score but it must be maintained once raised. Enlisting the help of a good credit counseling service as well as a financial planner can help in doing this. Though it may take as little as two months, you should be prepared to work at raising your score over two or three years. There are some items, such as defaults or bankruptcies that can take ten years to disappear from your history. The most important thing to remember is that you should responsibility for your own financial life. Work to keep your score high and reap the financial benefits.

Danny

Jed C. Jones Ph.D. asked:




Your credit score follows you wherever you go: when you move, when you change jobs, and when you apply for a new credit card or get a new loan.

The big three credit reporting agencies are Equifax, Trans Union, and Experian. They all use the same formula to calculate your score, but each one bases the calculation on slightly different information about your credit history. Hence, your score from each agency is a bit different. These agencies make millions of dollars each year by collecting this credit-related information about you and then selling it to businesses and creditors who request it.

If your credit score is lower than 720, you have either a fair or a poor credit score. This means you will not qualify for the best rates on credit cards and loans. Luckily, there are proven ways to improve your credit score.

Here are 5 ways to raise your credit score.

First, you must check your scores regularly from all three agencies. You can actually get your credit score for free online once every 12 months from each of the big three reporting agencies. It is also advisable to subscribe to any number of monthly online credit reporting services that give you regular updates each month. They will also inform you of any changes to your score.

The second step to raising your score is to be sure to correct any obvious errors in your credit report. There may be errors related to your current mailing address, glitches indicating you missed payments that you actually made, or erroneous charges attributed to you that you never actually made. You must fight and then correct each of these errors, one-by-one, by contacting each of the big three agencies separately. Note: when you contact an agency, they may ask you to show evidence of the error. At this time, they may also require that you send copies of documents that prove your own identity, such as a valid driver’s license or a passport.

Third, make sure you are paying all of your bills on time. If for some reason you are behind on your payments, contact each of your creditors and ask them for an extension on your payment due dates. You may also sometimes be able to negotiate a lower minimum payment for certain credit cards or other accounts.

Fourth, you can actually improve your credit score by opening new credit cards or store accounts. While this sounds like financial suicide for someone who already has a low credit score, having more credit extended to you actually improves something called your credit-to-debt ratio. In other words, the more credit you have, the better. Of course, the trick is that you must not borrow against the newly-acquired debt instruments. Hint: try to open new accounts one at a time every 3 months or so, and be sure to watch out for cards with high annual fees.

The fifth way to raise your score is to transfer all of your existing credit card balances to your lowest-interest cards. This could save you $100s per month in lower debt payments, which will help you pay down your existing debt faster and thereby help raise your credit score. Watch out for high balance transfer fees, but sometimes even paying these might be worth it if it means saving more money in debt payments.

Raising your credit score can be one of the smartest financial moves you make. Spend the necessary time and effort improving your credit score now and enjoy the long-term benefits of lower debt payments and the ability to qualify for more types of lower-interest loans.

June

Jon Arnold asked:




If your credit rating isn’t where it should be, the question you need to ask is, “How can I raise my credit score?” Buying a car and it’s insurance rate, acceptance on home loans, a decent interest rate on credits cards, and even getting a good job, or opening a bank account are all parts of having good credit. Many people feel that having good credit isn’t important, if they buy everything with cash. The problem is, sooner or later, everyone needs to depend on credit for something, and good credit can save you a ton of money if you are watching for your future well-being.

FICO provides scores used by two of the three largest credit score providers, TransUnion, and Equifax. Because of using FICO, TransUnion and Equifax are fairly uniform in their data. The other credit score provider, Experian uses the “PLUS” system. Because of the discrepancies among these companies you must constantly be checking to make sure all information is correct. Good FICO scores will rate between 723 to 850, while the “PLUS” system has a good ranking between 501 to 990.

There are many ways to chip away at below average scores.

1. Find a Good Credit Score Site.

There are many credit score sites to choose from, whether it be a one time payment or a site that will provide month to month. There are also sites that will give you a one time accounting for free when trying their service. The service they provide is to watch your credit report and notify you if there are inquiries or any changes that you should be aware of.

2. Check Your Scores and Credit Limits.

First check and see if there are any errors on your credit scores. Errors may include problems that aren’t even yours. This happens much more often than you might believe, especially when using different credit scoring providers. You may be surprised to find settled debts still on your score as well.

3. Pay Down Any Credit Cards.

Use credit cards sparingly and pay them down every month. They may be an easy and convenient way to buy, but you do pay extra for the convenience and it adds up quickly. Remember that, with a good credit score, credit card companies will offer you higher credit limits. Be wary of these as well and only take on what you know you can handle. Do not cancel any credit cards before paying them off. This counts against you on your credit as a surrendered card and will cause a bad credit score. A good rule of thumb, if you must carry a balance, is to pay more than the minimum amount each month, and keep your balance under about 30% of your credit limit.

4. Stay in Contact with Creditors.

Creditors appreciate communication. If you are having problems, let them know and try to work out a payment plan to stop a bad credit report.

Avoiding bad credit is your responsibility, not that of the credit score providers. They do and will make mistakes. Therefore, it is important to check your credit on a regular basis and make sure that if mistakes are made, they do not end up on your report which will make your rating lower than it really should be.

Charlene

PDolanUnitedMortgage asked:

If you have credit cards, you’ll want to make sure you don’t fall into the “Domino Effect.” Once it’s started, you can’t stop it, so this is very important for you. Even if you pay off your balance each month, this can happen to you.

Adrian

Michael Strauss asked:




Your credit score and credit card use are closely intertwined, with both effecting each other profoundly. The way you use your card can affect your credit rating for good or for ill, depending on how responsibly you use it and how prompt your payments are, but in this article we’ll be looking at how things work in the opposite direction, that is how your current credit score influences the kind of credit card you can expect to be approved for.

If you have an excellent credit rating then the whole range of cards on the market is available to you, providing that you meet minimum acceptance criteria such as salary level or residential status. You can expect to achieve a headline grabbing low interest rate, even within the single figure range, and you’ll be showered with extras such as cash back, rewards programs, balance transfer deals, and interest free shopping periods.

These kinds of deals are aimed at the financial elite among the population, and as you’d expect, most of us will have to settle for something a little less luxurious. If you have a decent but not outstanding credit score, with no major black marks such as defaults, then you’ll be able to choose from one of the mid-range cards. These cards will tend to offer generally unexciting features across the range, while boasting one or two stand-out features to attract attention. An example would be a card with a great cash back rate but a fairly high standard APR, or a card with an outstanding balance transfer offer but nothing in the way of rewards or cash back.

As we go further down the range of credit scores, the number of attractive features gets less while the standard APR gets higher. It also becomes harder to be approved, and applications for the cards in the best buy tables become more or less pointless. That’s not to say that there are no decent cards at this level, but you will have to look around a bit harder to find attractive features and low rates.

At the bottom rung of the credit card ladder we have cards specifically aimed at people with poor or no credit ratings. These cards charge extremely high interest rates, often in the region of 30% or even higher, and offer no extra inducements such as balance transfers. They will also tend to have a low credit limit, but with such high rates this is no bad thing – you’d want to avoid running up a debt in any case.

These cards are mainly beneficial for enjoying the convenience of a credit card while using it responsibly to build up a more positive credit profile for future applications for a better card.

If even these specialist cards are out of your reach because of a severely damaged credit rating, then this doesn’t have to mean you can’t carry plastic at all – there’s still the option of a secured or prepaid card which you need to load with funds before you use it. This of course means that they are not actually credit cards at all, but as they can be used in more or less the same way, they have many of the benefits in terms of payment convenience.

Regina

Zach Ford asked:




When banks, lenders, and credit card companies want to measure the risk posed by potential clients, they turn to the FICO scoring system. Your FICO score allows these companies to see exactly how good of a job you have done with managing your finances, and gives them insight as to whether or not you will be able to keep up with your monthly payments. Knowing where your credit score ranks is the first step towards maintaining and improving this financial reputation, so take the time to check your score today!

Checking your FICO score for free is easier than ever, thanks to the dozens of reputable credit scoring agencies that have taken their services online. You can request, receive, and view your score and credit report all in a matter of minutes, usually under 5 minutes. Isn’t technology fantastic? Even better is the fact that the US government has mandated that all the major credit reporting bureaus must give citizens a free copy of their credit information, if requested, once per year. This means that you can not only securely and quickly receive your FICO score from the comfort of your home, you can do it totally free of charge.

Once you have received your credit score you will want to determine how good, or bad, it ranks compared to the national average. FICO credit scores range from 300 to 850. The average American FICO score in 2009 was 692 points, which is considered a B+ score. A score over 720 is considered an A, and anything over 740 is extremely good and will get you an A+ rating. Any score over 620 is considered to be good credit and should not inhibit your ability to get approved for loans, leases, credit cards, and other financial services. However, if your score is under 620, you might want to consider taking steps towards improving your finances and repairing your credit.

George

Jacqueline Harris asked:




The higher the score you have, there is increased chance of getting better interest rates on loans, mortgages, and other financial help from governmental and private institutions. We have seen that people have few misconception about scores, more so because they are unaware of them. Here we have given some tips to better your credit score without any additional hassles.

For a start, most of the credit score is based on late payment that went beyond 30 days. Therefore, if you are delay in repayment with your debt for more than 30 days, it is going to reflect in the credit score. The best you can do is make the monthly payments in time and it will reflect positively in the score.

Secondly, a large percentage of the population thinks that if they purchase everything with cash, there will be no hassle of credit score. In the eyes of moneylenders, no credit leaves a negative impression. Why? There must be something you need credit for such as buying a lavish house. Therefore, using your card occasionally to make purchases is a good idea. Another important thing here is not to cancel your credit cards. You can shred them and throw away but do not cancel them.

Canceling them effects the credit score negatively, especially when you have used them over a period of 10 – 15 years and they have undoubtedly formed an internal part of the credit report. Know than 15% of the score depends on the use or history of credit card usage. Even if you are not using the credit card, keep the account open as it will give you better debt. Doing this will increase 30% of credit score.

Another thing associated with credit card is – never apply for too many credit cards. When you start to use too many credit cards, it leaves a negative impact in the long run. It works like this – if you start purchasing from multiple credit cards, it sends a red flag up the higher authorities and its also an indication that you are getting sucked in too much debt. Refrain from all these and improve your credit score.

Samuel

Natalie J. Johnson asked:




Uncertain future could play its role anytime. Your positive credit worthiness could shape into worst without any prior warnings. Financial report collection is one of the worst things one can ever imagine within the surroundings of credit dealings. If you are unfortunate to come across the report collection then your credit score would start to creep towards decline. The financial institutions which used to welcome you with smiles would not entertain you in positive gesture, anymore. If you intend to apply for any loans, mortgages or credit cards, your applications would face refusals.

Collection on report could be an ongoing threat on your report that would continue to bring your credit score to worst possible levels. Stated below are several tricks & ways to overcome credit report collections to bring your credit worthiness at normal conditions again.

Check the age of your collection entry. If is more than seven years then it would be, spontaneously, removed from your report as FCR Act regulates credit bureaus to wipe out records of collections which age more than seven years.

Writing a dispute letter to credit bureaus could also be of great benefit to throw away report collection. If credit bureaus find your dispute legitimate then they would remove collection from your credit report and you would get the updated credit report without a collection entry.

In case, where you have already paid for the collection but still it appears on your report then you should immediately contact your creditor to update credit bureaus about your payments. Once credit bureaus get proofs about your payments then they would replace the collection entry with paid collection.

Taking the services of credit repair firms could also be a good step towards removal of report collection because credit repair firms carry the experience & expertise to deal with different sorts of collections. There are many success stories of people who were able to get rid of credit report collections with the help of credit repair firms.

Esther

Rachel Rishul asked:




Having a good credit score can help you qualify for low rate private student loans, credit cards, auto loans, and historically low mortgage rates. But how do you know if you have a good credit score or not? Is there a way to calculate my credit score? We will try to answer these questions over the next few moments.

Your FICO score can land anywhere on a 500 point range from 300 to 850.

Take a look at the numbers below at the factors that determine your FICO score:

35% Payment History – equal to 192.5 points of your score
30% Amounts Owed – 165 points
15% Length of Credit History – 82.5 points
10% New Credit – 55 points
10% Types of Credit in Use – 55 points

As you can see if you want to have the best chance of obtaining a high score, you want to pay all your bills on time and keep the amounts you owe to creditors to a minimum.

Now what you can do is obtain all 3 of your free credit reports from the government’s annualcreditreport.com site and start reviewing all the information. The longer you have paid all your bills on time the higher the chance you’ll receive all 192.5 points in the payment history section. 24 months of on time payments is good, 36 months is better, 48 months and longer is best.

Next you check how much you owe on each credit card or outstanding loan. If all your credit cards are maxed out you will have a lower score somewhere in the 600s or below. If you have used half of your outstanding credit lines, you may be able to get 80 points or more from the amounts owed section.

Next you look at how long your accounts have been opened. Five years is good, 10 years is better, and 15 years or more is best. If you are a 21-year-old recent college graduate, it is not possible for you to have a long-term credit history so you will be unfairly dinged for this section of your FICO credit score. The only way to get more points from this section is to keep your accounts open and pay all your bills on time.

The next section to help you manually calculate your credit score is looking at your new credit. MyFICO states that you only apply for credit that you really need. Even hard inquiries can lower your score. These can come from insurance companies, mortgage companies, or credit card companies to name a few. So if you don’t need new credit, don’t apply and you can add an easy 55 points to your FICO credit score.

The last section is the types of credit you have in use. Ideally you should have short and long term accounts plus fixed installment accounts and revolving credit types. However this does not mean that if you do not have one type of credit that you should go out and apply for that type. A good credit mix could include a mortgage loan, car loan, student loan, and credit card.

Now you add up all your points and you have approximately calculated your FICO credit score. This is a long and tedious process. A much faster way is to obtain your free FICO score in seconds and then use a credit score calculator to show you the effects potential changes have on your score.

Clifford

Mike Selvon asked:




There is a set of numbers that rules your life. It is with you no matter what you do and where you go. Credit scores seem to be involved in every aspect of our lives. Good scores or even poor ones can determine whether or not you drive a new car, own a home or even have the job that you want.

It is hard to believe that something so simple, yet complicated, can make or break you. A good credit score is absolutely fundamental if you want to do anything in today’s economy.

But there is a lot of confusion on how a credit score is calculated and what makes it a good score or a poor one. In this article we will cover how credit scores affect your daily life and how important it is to have good credit.

What is credit?

You can think of credit as something such as a material item or goods given to you now that you pay for later. You agree that you will pay back the merchant a set amount, plus interest, for letting you get something immediately. In the times before credit cards many people would open lines of credit with local merchants that sold food or machinery.

It was an easy and convenient way for farmers to get the goods they needed until their crops came in and they could get paid. People today use credit for just about everything. It is a record of how you have paid past debts and many institutions use these lines of credit to determine whether or not you are eligible for any further advances.

If my credit score is low, is there a way to raise it?

A low credit score can happen for two reasons. The first is that you simply do not have any credit yet. The second is that you have had credit but have defaulted on payment arrangements thus lowering your score. If you have a low credit score there are steps you can take to raise it.

It may mean applying for a high risk credit card to slowly build your credit back. It can also mean paying off any closed accounts due to nonpayment. If you need a loan for an automobile or a home you will probably need a cosigner with good credit.

Then you should start making your payments on time and at the right amount. Over time your credit score will begin to go up and you will be able to do more on your own.

What happens to my credit scores after a bankruptcy?

Bankruptcy is a hard hit to credit scores. The main reason is that you probably have already defaulted on some credit agreements. But once you declare bankruptcy and are either absolved of the credit debt or you have paid a portion of it back, bankruptcy will remain showing on your credit for many years.

Bankruptcy is not an option that you should consider lightly. But if you find that you are missing payments and are financially unable to pay back the debts, you need to speak to a bankruptcy attorney as soon as possible to go over your options. Your credit scores will be affected but you will get a chance at a clean slate to start over again with time.

How do I handle a dispute over my credit score and some erroneous information?

Yes, you can handle a dispute over your credit score and erroneous information. The first step is to have a membership to a website that monitors all three of the major credit bureaus. When you notice an account that you did not open or are disputing the claims, you will need to contact that credit bureau and open up a dispute.

The credit bureau will contact the financial institution and then an investigation will occur. Hopefully you will be able to provide documentation that the account was never requested, never opened or was opened by someone using your identity. This is why it pays to monitor your credit.

Cynthia