Your credit report determines how much interest you will pay for your mortgage, credit card, or home loan. You need to know your score and ways to improve it.
Q. How do I improve my credit report and score?
A. The best way to improve your score is to avoid doing the things that lower your score.
Every time you apply for credit, make a payment, or miss a payment, you add information to your credit report and that affects your credit score. The companies that calculate credit scores don't reveal exactly how they do it, but they do offer general ideas for consumers. Learn more at www.myfico.com.
Pay on time. One of the best ways to boost your score is to improve your record of paying on time. Timely payment on all your debts is a must. Check your bills to see when payments are due; it may be sooner than you think. Late fees and interest penalties add up quickly and make it hard to pay the balance.
Pay more than minimum. Pay as much as you can on every account, and never less than the minimum.
Stay below the limit. Your credit score also considers how much credit is available to you and how you use that credit. If you regularly charge close to the maximum on your charge card you will hurt your credit score.
Have fewer accounts. If you apply for store credit to get a special offer or discount, you may harm your score, even if you don't use the store account often. Opening a new account and transferring your existing balances to the new account will not improve your score.
Group your inquiries. When you shop for a loan, each lender will check your credit history. Every "inquiry" is listed on your credit report. The credit scoring system sees too many inquiries as a sign of risk. Avoid this problem by comparison shopping within a short time period. If you make several inquiries about one type of loan, say a car loan, within one month, FICO counts this as only one inquiry. When you check your own report (make an "inquiry") you do not harm your score.
Wait for progress. A bankruptcy or series of late payments can lower your score quickly, and it will take time to recover. It is important to stay on a positive track. The credit scoring formulas give more weight to the recent positive history, and older poor performance fades away.
The Federal Trade Commission (FTC) works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or to get free information on consumer issues, visit the FTC web site or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
Showing posts with label credit. Show all posts
Showing posts with label credit. Show all posts
Friday, May 8, 2009
A Good Credit Report – The Key To Cheap Finance
Is your credit report important? There are a lot of people who would not consider their credit rating as something too important to them in their life. There are others who, while recognising its importance, would not be overly concerned about the issue or understand the reasons for its importance. Well, to those people, they should at least be aware of some of the uses that are made of credit reports in the world in which we live.
Lenders
While it may seem obvious to state it, credit reports are predominantly concerned with assessing the risk involved in lending money to you. Lenders are obsessed with one thing, getting repaid, and their entire industry revolves around making this occur. Therefore, they have developed the credit score that will assess your likely hood of repaying them and this is then used to either approve or reject your application for credit. While this is the basic purpose, some more sophisticated lenders desire to get in on an ever larger share of the market and in order to lend to higher risk borrowers, they create different categories of loans which people with lower scores can qualify for. These loans will invariably have higher interest rates and other less favourable conditions and this will be the price you pay for having a lower credit rating.
Since loans are used to finance homes, education, cars, and most other large purchases in life, the inability to get access to credit, or only to be able to get it at less attractive terms and rates, is a substantially reason to care about your credit report and try to keep it in as good a condition as possible.
Credit reports are also used when you apply for renting or leasing accommodation. This is usually because the landlord wants to be fairly certain that you’ll be able to pay your rent as it falls due. So keeping your credit score healthy at this stage will pay off if you need to be approved for renting or leasing residential property.
There is also a trend among employer to start using credit ratings when assessing job applicants. The reasons they are making use of credit reports are of course different for every employer but there is a consensus that a healthy credit report and a good past record of meeting financial commitments is a good sign that the job applicant is someone reliable and worth employing. While it does seem slightly perverse that the very people that will need a job the most are precisely the ones that can be denied it but that’s the direction things are moving in.
Lenders
While it may seem obvious to state it, credit reports are predominantly concerned with assessing the risk involved in lending money to you. Lenders are obsessed with one thing, getting repaid, and their entire industry revolves around making this occur. Therefore, they have developed the credit score that will assess your likely hood of repaying them and this is then used to either approve or reject your application for credit. While this is the basic purpose, some more sophisticated lenders desire to get in on an ever larger share of the market and in order to lend to higher risk borrowers, they create different categories of loans which people with lower scores can qualify for. These loans will invariably have higher interest rates and other less favourable conditions and this will be the price you pay for having a lower credit rating.
Since loans are used to finance homes, education, cars, and most other large purchases in life, the inability to get access to credit, or only to be able to get it at less attractive terms and rates, is a substantially reason to care about your credit report and try to keep it in as good a condition as possible.
Credit reports are also used when you apply for renting or leasing accommodation. This is usually because the landlord wants to be fairly certain that you’ll be able to pay your rent as it falls due. So keeping your credit score healthy at this stage will pay off if you need to be approved for renting or leasing residential property.
There is also a trend among employer to start using credit ratings when assessing job applicants. The reasons they are making use of credit reports are of course different for every employer but there is a consensus that a healthy credit report and a good past record of meeting financial commitments is a good sign that the job applicant is someone reliable and worth employing. While it does seem slightly perverse that the very people that will need a job the most are precisely the ones that can be denied it but that’s the direction things are moving in.
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