Credit Score is like the exam score with minimum cut off to get admission into a prestigious college. Brings back the memory of olden days when students ply around colleges for good education for better jobs. Securing higher marks is similar to gaining credit score increase.
I would not be talking about how to increase or enhance your Credit Score since I believe, no matter what your score is it’s never enough. We feel that we could have got a better bargained APR for the new car we have purchased.
So let’s talk about how to get rid of your lower credit score. Some prefer calling it as the FICO score. This reminds me Transunion uses Emperica Score FICO. Equifax uses Beacon score FICO and Experian used Fair Issac FICO. The algorithms used by each are different but they have similar weightage for factors. This is precisely the reason why all the three Credit Rating agencies have different scores. They might not vary much.
One advice for increasing your credit score which many experts give is to increase credit limit on your credit cards. This is a time tested solution for a ‘credit score improve’ key.
What is the acceptable ratio of credit limit and utilisation? It is considered to be safe to utilise 30 % of your existing credit limit. Above 50 % is still OK but if you are over drafting on your credit card, then your credit score will fall drastically, even before you knew it.
What should one do when credit card companies are reducing credit limits and unused credit lines?
There are companies where you can formally make request for credit limit increase. Wells Fargo and American Express are two such Credit Companies which do have the credit limit increase option. There are policies attached to each of them but they are by far the best ones to try for credit limit increase, thereby leading to credit score increase.
Another advice which I use to increase my credit score is balance transfer.
I try to reduce the overall limit on my credit cards by consolidating them and transferring balance from a higher utilised card to a lower utilised card thereby also benefitting on the interest rate that is applicable.
Credit card is a revolving debt and is looked with more suspicion than any other loan like a mortgage or a car loan instalment.
The balance transfer is bit tricky; you need to check the benefit you get moving from one company to another. What are the applicable rates? And are there any hidden charges?
One thing I use is I call up my credit company and inform them about my intention to transfer my balance since I am looking for a consolidation. The original credit card company then tries to retain a customer and negotiates a better rate. Either ways you win. Overall less credit utilisation reflects well on your credit score report
There is another part which is very important and which can negatively affect your credit score is if you were to pay an older credit in full and expect it to do good to your credit report. The reason being if you are paying an old credit which you did not pay so long and it was approaching the Statute of limitation, then it means by paying you have made it current and you did not even ask the people to remove the negative from your credit report. This will decrease your score rather than increasing it.
Improving your credit score on your own is the best way to do it. Please do not try to go for quick fixes they can affect you badly. Especially do not try to get involved in identity theft. People try to create different credit files for the same name.
Gladwyn Riggs is a well known expert in the specialised field of Credit Score improvement. He has come up with an amazing Hand Holding Guide for Rapid Credit Score Increase.
What is the importance of credit score? Frankly it is a very basic and Indeed a very good question.
Let’s try to find out the history behind credit scores and how it came into existence. What was the inherent need of having it in the first place?
Bankers and credit card agencies who give loans would like to know the risk they are taking. That in turn also affects the APR they are going to charge. Banks have to provide Non Performing assets at the end of the fiscal year and declare to its shareholders. So each bank had devised a method of trying to find the credit behaviour of its consumer. They had various parameters encompassing the history and length of credit. But it was never standardised.
Later the Fair Isaac Company came up with a scoring model which is very well known in the industry circles as the FICO Credit Score, used by EXPERIAN. This score gives weightage to various consumer behaviour parameters like 35% Payment History, 30% amounts owed, 15 % length of credit history, 10% new credit and 10 % on types of credit used.
Year 2009, the subprime crisis and aftermath have led to a tighter credit market with credit crunch and Banks adopting stricter policy norms.
So what has changed, the banking and credit card companies are getting risk averse. They prefer a much higher score in credit report. Now the logical question would be what this score is. The range varies with the type of loan you are applying and so does the cut off.
Generally, a score of 700+ is considered good for the mortgage related housing loans. A score of 670+ is decent for getting a good deal at the car dealers. The car dealers also tend to ask for a much higher down payment for people who have poor credit rating scores.
It has also been seen that credit reports offered by Credit Rating agencies have as many as 29% serious erroneous reports. 71 % reports have some other error of minor importance. So there is a high probability that your credit report may have a negative which was added by error and so it is imperative that you monitor your credit reports once at least every quarter.
Credit score has been taken as guidance by almost all the major credit card companies and lenders for giving loans and credit cards. It is a negotiating factor during business deals and hence it should be noted by one and all that YOU MUST take good care of having a credit score that is in the higher range.
Credit Score is not a percentage but a percentile and also it is a straight way comparison of apple against apple so You will be compared with a similar background person having similar credit payment history.
Importance of credit score lies in the fact that it brings the extra reliability of payback for the lenders and thereby it increases the chances of you getting a loan.
Credit score is important for securing good loan from a reliable bank which is liquid and has a good market image.
Importance of credit score also lies in the fact that once you have a good credit score, you are assured of a decent APR from a good company. It has actually standardised the process of getting debt and money flow.
Gladwyn Riggs is a well known expert in the specialised field of Credit Score improvement. He has come up with an amazing Hand Holding Guide for Rapid Credit Score Increase. Check it now
Scams associated with credit repair companies or credit score scams.
Everyday there is a new credit repair company which spins off declaring it has got a quick fix to raise the score of its client and charges a hefty sum.
The promises are to clean up the credit score so that they can get a mortgage, car loan, insurance or even a job.
Fact is no one can remove a correctly mentioned negative entry on your credit report. So after you have paid a hefty amount to the credit report what you get is same credit report and a lot less money and a lot less time which you could have otherwise utilised.
The Only Legitimate repair starts with YOU and Only YOU.
There are certain laws that you should be aware of:-
1. No credit repair company can charge you all amount before they have completed their promised services.
2. The company cannot refrain you from contacting all the three credit rating agencies.
3. The company cannot ask you to try to invent a new credit identity and then a new credit report- by applying for an Employer identification Number instead of your social security number
4. To file a complaint against all such credit repair companies visit ftc.gov or call the toll free number 877 (FTC HELP) (1-877-382-4357)
Sometimes it happens that due to desperation we try to adopt some shot cuts which we feel are legitimate since everybody else is doing it. Credit repair scams are taking advantage of your desperate situation. So it is always important to take care of your finances on your own.
There are certain fantastic ONLINE Resources which are legitimate and which can be a great guide for easing your way in making a successful transition from an average credit score to a most amazing credit score.
You should look out for the credit card repair scams and take full responsibility and leadership in dealing with your own situation.
Nothing is more amazing than having a feeling that you could take care of your own situation on your own and made a positive change. This reflects on other parts of your life since once you are in control of your financial health your overall confidence increases manifold.
Beware of the credit repair scams and try to stay away from them. It is in best interest of you and your credit score. Since for present there might be no accounts held by FICO as manipulated but in future there might be a change in algorithm and you might find yourself at the wrong end of law just because your credit repair company had illegitimately tried to increase your score. Credit repair scams have grown in alarming proportions and this has to be controlled.
Do your own credit repair and even if you have a bad debt it should be a long term goal to be debt free best put as financial freedom
Gladwyn Riggs is a well known expert in the specialised field of Credit Score improvement. He has come up with an amazing Hand Holding Guide for Rapid Credit Score Increase.
There is several ways and variables that play into an individual score make it impossible to say that one particular action will increase a given score by a certain number of points. Sometimes, I have great results when a borrower pays down a credit card or pays off a collection; other times, it makes very little difference. But there are at least some good guidelines to try and follow.
Here are some tips I’ve picked up along the way:
1. The fastest way to a great score is pay your bills on time, keep account balances low, and take out new credit only when you need it. This is mainly about plain old common sense. People who do these things faithfully usually have very high scores. To lenders, high scores signify that you’re being conservative and cautious about credit. In turn, they see you as a lower risk borrower and will reward you with much better terms and a much lower interest rate.
2. What if you’re house hunting and you just need a few extra points to bump you over the line to the great rates? Start by having your mortgage broker, pull your credit report and your credit score to see where you are. If your score is above a 720, you’re golden. Even 700 is going to get you good terms. Improving your score from, say, a 720 to a 740 won’t get you better terms, though, so don’t waste your time doing that. Just continue to follow the guidelines above. What you’re really looking for on your report are factors that could be negatively affecting your score. Look for errors in the report, such as accounts that aren’t yours, late payments that were actually paid on time, debts you paid off that are shown as outstanding, or old debts that shouldn’t be reported any longer (negatives are supposed to be deleted after seven years, with the exception of bankruptcies, which can stay for as long as 10 years). Every time I meet with a client, I go over their report with them to ensure that the information is correct. I can’t tell you how many times there has been old or downright incorrect information in the report! 75% of credit reports contain errors. Hmmmm!!
While repairing errors, the fastest route to a better score is paying down balances on credit cards; in my experience, it’s possible to increase your score up to 200 points or more in 90 days by paying down your credit lines because it helps your debt to credit ratio. 30% of your scores are calculated by how well you manage that area. If you can’t pay them down then you must apply for new credit to offset your debt to credit ratio. What that means is that, the credit scoring system looks at all your credit card limits and your credit card balances and calculates what your credit limit vs. what your balances and shoots out a percentage. So for example, If you have a credit card limits that amount to $10000 and you owe $8000 on them, you are at 80% of the credit limits. Your debt to credit ratio in that case is at 80%. Typically you want to be at 30% or less. If you would like to apply for high credit limits to help your debt to credit ratios visit www.ePublishingUSA.com . They approve anyone with a heartbeat. Let all your friends and family know so you can help them with their credit. From now on, do your best to pay your bills on time (or ahead of time) and keep your balances as low as possible. After 12 monthsthe scoring module becomes immune to that late and your credit scores are not affected.
3. One thing you shouldn’t do if you’re just trying to boost your score is close unused accounts. If someone tells you to close unused accounts to improve your score, don’t listen. It won’t help you and it can hurt you. Closing unused accounts without paying down your debt changes your utilization ratio, which is the amount of your total debt divided by your total available credit. You appear closer to maxing out your accounts. That’s why your score can drop. It doesn’t mean people shouldn’t close them, but don’t close them to improve your score. If you do cut up cards, though, leave the oldest one open! The length of your credit history is another factor in your score. If you close the account of the credit card you got when you were a freshman in college and leave open the ones you just got within the last couple years, it makes you look like a much newer borrower.
Bottom line: know that you’re not powerless when it comes to your credit score. There are a lot of things you can do to improve your score and you need to understand what your credit is like now and what’s influencing your score today. Then you can go out and get that amazing interest rate!
Getting back on track after you’ve had a financial shock can be very difficult indeed; banks will turn you away and getting a credit card is almost impossible, so it can be extremely disheartening if all you want to do is start afresh. The primary reason people get turned away from credit is because their credit rating is poor. This could be for a number of reasons, and the only way you can really know what they are is to look through your file to find them. There are a number of things that you can do to try and bring your credit score back up to a respectable standard.
If you’ve still got old credit cards lying around that are still open, you’ll want to make sure they’ve been cancelled before you apply for new credit accounts. This is because the open credit card accounts will show up as available credit, and will reduce the amount of credit open to you from other lenders.
Make sure you pay back your credit card every month, without delay. Even small issues can set your credit rating back months or even years. Make sure you are at least up to date with the minimum repayment schedule, so that there aren’t any problems at all. However, it is best to try and pay back as much of the debt as possible, so if you’ve got any savings, use them to pay off debt early while you can.
Don’t keep applying for credit once you’ve been rejected once. Every time a lender checks through your credit file, a note will be left on your report. If checks are being made all the time, there will be numerous notes left and this will damage your credit report.
Talk to your lender; this may sound obvious, but far too many people simply try to avoid talking to their lender in any way possible. The fact is, if you can’t pay off your credit card debt, the best thing to do is to go and talk to someone who may be able to arrange a new payment structure with you. This may damage your credit rating slightly, but will be much better than going into further debt and potentially getting a county court judgement (CCJ).
Apply for an expensive (high interest) credit card, and make small payments onto it. Don’t use it too much and don’t rely on it as your sole source of spending power. Consistently paying it back and avoiding the high interest rates will allow your credit rating to improve rapidly.
Check your credit report for any errors that may have occurred; these can be things like old contracts for mobile phones that were assigned to a different address. Some of these errors are unbelievably easy to solve, so checking your credit report is one of the first things you should do once you’ve been rejected.
Clearly, there are dozens of different ways to improve your credit rating, but those listed above will help you greatly in the short term.
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