credit score

What Makes Up Your Credit Score

Ever wonders what happens when a potential lender requests your credit score? First, they send a request to a credit bureau, and they receive a report. This report will include:

* Your name
* Your Social Security number
* Your address (and any previous addresses)
* Your current and past loan information
* Your public record information (court judgments, bankruptcies, liens)
* A list of other companies who have reviewed your credit.
* Your 3 digit credit score

While some of this information is self explanatory, some of the other aspects, especially your credit score, are a bit of a mystery to most consumers. Few people know their credit score or understand how it is calculated. Additionally, most people are unclear about how their behavior can affect their scores.

The majority of people understand the basics, like failing to make a payment will make your score go down, but there are a number of complexities that trip up the average consumer. If you pay your debts on time, don’t carry too much debt on any one card, don’t close older accounts unless absolutely necessary and only apply for new credit when you have to you will generally be in good shape. However, it is important to keep yourself informed so you can maintain a credit score that accurately reflects your consumer status.

Your credit score is determined by an algorithm developed by the Fair Issue Corporation (hence its other name of FICO score). Since its inception, three corporations, called “credit bureaus” specialize in collecting and reporting on financial histories. Those three companies are Equifax, Experian and TransUnion. While, the exact formula used to calculate your credit score is a tightly guarded industry secret, these companies provide general guidelines about financial behavior that can affect your credit score. When calculating your score, the basic formula includes:

35 percent: History of on-time or late payments of credit.

30 percent: Available credit on your open credit cards

15 percent: The age of your lines of credit (old = good)

10 percent: How often you apply for new credit.

10 percent: Variable factors, such as the types of open credit lines you have

Lenders use your credit report in orde
1000
r to judge your reliability as a loan candidate. Your credit report indicates your ability to handle debt responsibly and will help banks decide if you are a desirable loan customer. A high credit score can help you lock in low APR rates or secure special deals on loans. A bad credit report may prevent you from securing loans and can damage your ability to buy a car, open a credit card or rent a home. A history of inability to manage your credit successfully will make lenders uncomfortable about trusting you with additional funds in the future.

You are entitled to a free copy of your credit report once a year, an offer you should take advantage of. When you do receive your credit report, check to ensure the figures are accurate and act quickly correct any mistakes. This may include any clerical errors, identity theft issues or incorrect information. If your credit score is low, you should begin working on a financial rehabilitation plan, either on your own or with a certified debt councilor, to begin correcting your bad debt habits.

By: Mick Bernard

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Mick is a Certified Credit Restoration Expert and President of Credit Strategies, a credit consulting firm in Scottsdale, Arizona. Credit Strategies works with consumers with less than perfect credit increase their credit scores so they can qualify for the best possible financing. If you’re looking for some credit restoration then conciser our credit repair program.

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Credit scores are on trail to become one of the most important numbers for every American citizen. As most of us widely use credit cards and will continue doing so in the years to come, the credit card score determines credit worthiness of every single individual. ‘Credit score’ was not a very common term, but has now become so important that calculation of eligibility for small loans, are also based on this number.

The economic slump that we witnessed last year has contributed vastly in the increased usage of credit scores. All lenders want to be sure that they are lending money to the right person. So, keep your credit scores at a high level not allowing it to drop due to lack of you willingness to arrange for funds and pay off the dues.

You must analyze the reasons why you are in such deep debt. Remember, unsecured debt always has higher charges like late payment fees, high interest rates and a lot of other hidden charges if you are slack and ignore the credit lenders. Develop good habits like paying your monthly dues instead of opting to pay just the minimum amount due. This will make a huge difference if the amount you owe is high because the charges levied accrue quite fast to make it a huge debt.

Do not use all the credit cards you have. Have some for emergency and strictly follow this rule. Prioritize your payments by deciding to pay the credit cards that carry a high interest first. Another important topic what is worth glancing is ‘bankruptcy’. Declaring bankruptcy may be the worst thing to. You may temporarily heave a sigh of relief but the repercussions of declaring bankruptcy are unendurable. You will have to live with all the constraints that financial institutions impose. Your credit rating will take a blow, you will not be eligible for home loans for quite a few years, the interest rates on small loans will be exorbitant… the list can go on and on.

So decide to pay on time and if you have high unsecured debts work with credit repair companies that can lend you a helping hand to plan and manage the debt payments.

Do you want a 700+ Credit Score? Many items found on credit reports are disputable and can be completely removed and eliminated, returning an attractive luster to your credit score. Contacting a reliable credit repair company can put you back in control of your financial future. For a fresh start and a higher credit score, Click the following link for free information and advice on how to repair your credit quickly and legally.

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