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Enhance Credit Ratings – Arm Your Self With The Data Required To Get Back a Strong Credit Score

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The very best method to increase your credit score is by stocking up on data concerning the techniques of credit score improvement. I bet that is what you’re carrying out as of this moment even though you’re reading this write-up. An excellent credit score will not only support you acquire mortgages and loans however it will also decrease the interest rates charged by your credit card providers. Now that we’re all within the post-crisis stage, an improved credit score can help you rebuild your life and make way for a superior life style.

So what are the kinds of data you’ll need to boost your credit score? The first issue you need to understand is the three-digit numbers that represent your score. Credit scores range from 300 to 850 and also the higher the score, the greater your credit rating. This three-digit gauge is calculated by a method developed by the organization Fair Isaac Corporation or FICO to represent your creditworthiness.

Why is this crucial? It’s incredibly critical due to the fact lenders, employers, landlords, and insurers use this information and facts to base their decisions in your application. Your credit score is like your simple ID for employment, rental, mortgage, credit card, and loan applications. A creditworthy applicant with a 700 or greater credit score has far better chances of landing a job, securing a rental, and acquiring loans, credit cards, and mortgages.

There are some company web sites that give FICO credit scores for no cost or at an inexpensive low cost but you must steer away from web sites that demand you to sign up for a credit service they offer you. Please note that you simply have 3 separate FICO credit scores. Why? Because you will discover three separate credit reporting bureaus (Equifax, TransUnion, and Experian), you will have three FICO credit scores according to the credit reports of every single one.

The subsequent details you need to acquire is your credit report. Your annual credit report will need to show the history of one’s payments for the year which consist of the list of all your accounts with the balances and payments you’ve got created for each and every one. Americans are entitled to cost-free annual credit reports from each of the credit reporting bureaus and also you can request your credit reports in 3 approaches:

” completing and mailing the Annual Credit Report Request brochure printed from the Federal Trade Commission web site

” calling (877) 322-8228

” accessing your online credit report from AnnualCreditReport.com

What’s the importance of obtaining your credit report even if you already have your credit score? Since your FICO credit scores are calculated according to the data contained in your credit reports, you may immediately strengthen your credit score if you spot and appropriate any inaccuracies filed by the credit reporting bureaus.

By empowering your self with the facts you need and specifically know exactly where your credit stands as of this moment, you might have the ability to produce and design a good plan in boosting and regaining a strong credit score. Constantly remember that a strong credit score will assist increase your way of life and boost your chances of finding ahead in every little thing you desire.

How to Improve Your Bad Credit Score

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There is nothing good about bad credit. It is the exact opposite of good credit. While good credit helps you qualify for car and home mortgage loans, bad credit could keep you from being able to buy these large-dollar items. It can also keep you from qualifying for credit cards and may possibly hinder your ability to rent a house or apartment. It is very easy to end up with bad credit. Bad credit ratings happen when a person does not pay back money borrowed on time or when that person simply doesn’t pay it back at all. There are varying degrees of bad credit. A person is not automatically given a bad credit rating if he misses a payment or is late a time or two. However, if a person is continually late or he does not make a payment for several months, his credit rating can be affected and could possibly hurt him in the future. Credit ratings, even bad ones, can be improved and fixed. Depending on the situation, with responsible credit usage and prompt payments, bad credit can turn into good credit over time. The first step is to understand what your credit rating is by pulling your credit report. Credit reports are available through one of the three major U.S. credit bureaus: Experian, Equifax and TransUnion.

There may be many different reasons for your bad credit report history. A bad credit history can make it difficult for you to borrow money when you need to. Your credit history is a detailed history of all your debts and is tracked by credit ratings agencies in the US. Understanding how your credit history is compiled can help you to avoid situations which may result in you earning a bad credit report. Your history tells creditors things such as whether you pay your bills on time, how long you’ve used credit, if you’ve opened several credit card accounts in a brief time frame, and how much debt you have compared with your available credit limit. Credit scores are tools used by lenders to evaluate all this information and determine the risk that you will not be able to repay a debt as agreed. Although you can’t rewrite history, the passing of time can remove negative credit information from your report. Negative records such as collection accounts and charge-offs will remain on your credit report for 7 years after they are first posted, while bankruptcies stay on your record for 10 years. Paying off on a particular debt account before the end of its set term doesn’t remove it from your credit report, but will cause the account to be marked as ‘paid.’ It is still a good idea to pay your debts; it can improve your credit score. However the major improvement you will see to your credit score is when the particular record expires. Weak credit scores don’t necessarily mean you won’t obtain credit. You can get rid of bad credit habits, restore your positive credit history, improve your credit scores and use credit to your advantage.

Do you want to know how to enhance your credit scores? Having bad credit scores can affect your ability to leverage financial services or pursue job opportunities. Think of your credit score as a picture of your credit risk. This picture reflects your risk at a specific point in time. A picture does not change; however, when you take another one, you will probably look a little different. Similarly, an alteration to your credit information will result in a change to your score, reflecting updated information on your creditworthiness. However, a bad credit score can be improved with a little dedication and fortitude. The only true credit score quick-fixes are to pay down debt in time. Late payments, collections, and bankruptcies have the greatest negative effect on your credit score. It is advisable that you check your credit report regularly and take necessary steps to successfully dispute negative information on a credit report.

My Credit Score Goes Lower…when My Credit is Pulled! By:author Michael Malloy

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My credit score goes lower..when my credit is pulled By Michael Malloy Does my credit score drop when my credit report is requested?

There are a number of misconceptions about how a credit score is determined and affected, including the idea that a person’s score automatically drops when a credit report is requested. The truth is that a credit score is determined by individual credit bureaus only after considering a laundry list of factors, such as payment history and the number of open accounts that a person has. The number of requests for a credit report, also known as inquiries, makes up only ten percent of the criteria for a credit score adjustment. Some credit experts say that credit scores can drop as much as five points when a credit report is requested, but others say this is more of a myth than reality.

“The credit report reads like a map, but the question is where is it leading you? Is it taking you down a path of rejections and denials, or is it leading you to a better quality of life – a new home, car, or college for your kids? Is it presenting the opportunity for a vacation or forming the foundation for a brand new business? Let’s get you on a GPS system for credit improvement and get you out of this mess once and for all!”

The Credit Physcian

There are two different types of credit report inquiries in the credit world: “soft” and “hard” inquiries. A soft credit inquiry occurs whenever a consumer requests his or her own credit card report from a bureau, or when a credit report is requested by a current creditor investigating a dispute. This type of credit inquiry is not supposed to have any effect on a consumer’s credit score since it was made at the request of the consumer himself or an established creditor. A hard inquiry, however, can lower a consumer’s credit score under certain conditions. A hard inquiry occurs when a credit report is requested by a lender considering a new loan or other parties who may have judgments or liens against the consumer. For example, when a credit report is requested by a court or the IRS, a potential lender may be more reluctant to offer the best interest rate or the maximum loan amount. Credit bureaus do understand that a number of hard inquiries connected with housing or car loan applications are not unusual, so when a credit report is requested by more than one lending company for the same purpose within days of each other, it is often counted as only one hard inquiry on the credit report.

Whenever an invitation for an unsolicited credit card arrives in the mail, there is always the possibility that the sender did make an inquiry into the consumer’s credit status. Fortunately, when a credit report is requested by an outside interest without the consent of the consumer, the inquiry is not usually counted against the consumer’s credit score. Inquiries are supposed to remain on a consumer’s credit report for up to two years, although many lenders are primarily interested in the number of inquiries made in the last six months. Applying for too many credit cards or store accounts in a short period of time can make a consumer look desperate in the eyes of lenders, especially if many of those requests have been turned down.

In short, when a credit report is requested by the consumer himself or in response to an existing situation with a creditor, there should be little to no effect on credit scores. If there are too many inquiries in a short amount of time, the credit bureau may see that as a negative and lower the consumer’s credit score several points. This adjustment may have little effect on a consumer’s ability to secure a loan or open a new account, but if the adjusted score falls below 600, the result could be higher interest rates or a lower line of available credit.

Things You do to Drop Your Credit Score !

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Credit Score Mistakes ” common things to watch for

Follow these tips to avoid the common traps that can sink your credit risk rating:

Debts and credit you don’t use.

It is easy today to apply for a store credit card that you forget all about in three years – but that account will remain on your credit report and affect your credit score as long as it is open. Having credit lines and credit cards you don’t need makes you seem like a worse credit risk because you run the risk of “overextending” your credit.

Also, having lots of accounts you don’t use increases the odds that you will forget about an old account and stop making payments on it – resulting in a lowered credit score. Keep only your used accounts and make sure that all other accounts are closed. Having fewer accounts will make it easier for you to keep track of your debts and will increase the chances of you having a good credit score.

However, realize that when you close an account, the record of the closed account remains on your credit report and can affect your credit score for a while. In fact, closing unused credit accounts may actually cause your credit score to drop in the short term, as you will have higher credit balances spread out over a smaller overall credit account base.

For example, if your unused accounts amounted to $2000 and you owe $1000 on accounts that you have now (let’s say on two credit cards that total $2000) you have gone from using one fourth of your credit ($1000 owed on a possible $4000 you could have borrowed) to using one half of your credit (you owe $1000 from a possible $2000). This will actually cause your credit risk rating to drop. In the long term, though, not having extra temptation to charge and not having credit you don’t need can work for you.

” The credit physician says to look at your credit report every month,the most common error people make is not checking there report for mistakes and new items,like collections and charge offs,this will effect your score in a very negative way,and can drop that score very fast and can set you back months even years,if your not keeping your eyes on your credit report.”

Inquiries on your credit report.

Every time that someone looks at your credit report, the inquiry is noted. If you have a lot of inquiries on your report, it may appear that you are shopping for several loans at once – or that you have been rejected by lenders. Both make you appear a poor credit risk and may affect your credit score. This means that you should be careful about who looks at your credit report. If you are shopping for a loan, shop around within a short period of time, since inquiries made within a few days of each other will generally be lumped together and counted as one inquiry.

You can also cut down on the number of inquiries on your account by approaching lenders you have already researched and may be interested in doing business with – by researching first and approaching second you will likely have only a few lenders accessing your credit report at the same time, which can help save your credit score.

Online loan rate comparisons.

Online loan rate quotes are easy to get – type in some personal information and you can get a quote on your car loan, personal loan, student loan, or mortgage in seconds. This is free and convenient, leading many people to compare several companies at once in order to make sure that they get the best deal possible.

The problem is that since online quotes are a fairly recent phenomenon, credit bureaus count each such quote estimate as an “inquiry.” This means that if you compare too many companies online by asking for quotes, your credit score will fall due to too many “inquiries.”

This does not mean that you shouldn’t seek online quotes for loans – not at all. In fact, online loan quotes are a great resource that can help you get the very best rates on your next loan. What this information does mean, however, is that you should research companies and narrow down possible lenders to just a few before making inquiries. This will help ensure that the number of inquires on your credit report is small – and your credit rating will remain in good shape.

Thinking that you only have one credit report.

Most people speak of having a “credit score” when in fact most people have at least three or more scores – and these scores can vary widely. There are three major credit bureaus in the country that develop credit reports and calculate credit scores. There are also a number of smaller credit bureau companies.

Plus, some larger lenders calculate their own credit risk scores based on information in your credit report. When repairing your credit score, then, you should not focus on one number – at the very least, you need to contact the three major credit bureaus and work on repairing the three credit scores separately.

Written by: Michael Malloy The Credit Physician
” empowering you to take control of your credit”

Credit Card Debt Settlement – It may be worth sacrificing your credit score

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Anyone in advertising will tell you that the most effective marketing campaign is one that manages to attach an emotion to a product.  Clothes, makeup and weight-loss products are marketed to women on the basis that the they will feel sexier, prettier and more attractive, ultimately leading to love.  Cars, beer and aftershave are marketed to men on the basis that the  they will be “cooler” and attract prettier women.  Coca-Cola and McDonald’s show people laughing and having fun, suggesting they will feel happy when drinking a Coke or eating a Big Mac.

Similarly, we are taught through lending practices, parental suggestion, bank advertising and social pressure that a poor credit score suggests not only the loss of untold dollars due to higher interest rates on loans, but amazingly, that a high credit score makes you a “good” person and a low credit score makes you a “bad” person.  Who hasn’t seen the silly television commercials that suggest you’ll be driving a junker car and working at the Renaissance Faire if you have a low credit score? 

This identity-attachment we place on our credit score is so subtle that most people do not even realize it is affecting their financial decisions.  I’ve actually met people who would love to buy a home but stop themselves with a fear-based rational such as, “I might lose my job and not be able to make my mortgage payments.”  What does that actually mean? The deeper thread goes like this, “And if I miss my mortgage payments I may have to sell the house for less than I owe, or worse, foreclose, and that would hurt my credit score and that would make me a bad person.”  People don’t actually put those words to their thoughts but that is the emotional journey they take that prevents them from buying a home.

We’re taught to treat our credit score as if it is part of our identity and guess what? It isn’t.

If you currently have a low credit score and find yourself suffering from the belief that you are a failure, that you are not good with money, or that you don’t deserve a loving spouse, great kids, a good job and “the pursuit of happiness” as much as everyone else does, then discard those thoughts right now.  Having a bad credit score doesn’t make you a bad person any more than not wearing designer clothes or driving a sports car makes you unloveable.  Your credit score is a product, just like everything else advertised to you, and it IS NOT connected to your identity.

What your credit score IS, is one piece of an overall financial picture that includes your income, your expenses, your investments, your assets, your business, your retirement savings and your debt.  I’m suggesting that you look at that whole picture and not make financial decisions based solely on whether or not you might affect your credit score.

If you’re in debt, what that means is that there may be some financial choices available to you, some as small as skipping a credit card or mortgage payment, some as large as bankruptcy or home foreclosure, and inbetween options such as a short sale or debt settlement, that may be viable even if they will lower your credit score.

I know, that’s a bold statement, one that most people would disagree with on face value.  To see what I mean, lets look a little deeper.

Your credit score is a vague, logarithmic calculation that assesses risk for lenders.  A low credit score doesn’t mean the borrower can’t get a loan. People just out of bankruptcy court routinely receive credit card offers in the mail and we’ve all seen commercials for “low credit, no credit” car loans.  More likely than having no access to credit, a low credit score simply means that the borrower will pay more for credit in the form of higher points and interest.

The banking industry would have you believe that, in addition to being a “bad” person, those points and interest on future loans will cost you SO MUCH money that you couldn’t possibly ever consider doing anything that would lower your credit score. 

Let’s do the math on what a low credit score might actually cost.  Say you are buying a $25,000 car, $5,000 down and $20,000 financed.  If you have a “good” credit score, you might get a 5% loan.  Over 60 months, the total interest paid will be $2645.  With a median credit score you might get a 6% loan which would amount to $3199 in interst.  A bad score with a 7% loan, $3761.  The difference between the high score and the low score is $1100 in interest over 60 months, about $18 a month.

What about with a house?  Say you want to buy a $500,000 home with 20% down (sorry, the 0-10% down days are over for awhile).  So you’re financing $400,000 for 30 years.  At 5% you’ll pay $373,000 in interest. (I know, brutal, right? Almost 100% interest over the course of the loan. Most people never consider what a home will actually cost by the time they are done paying it off, but that’s another article).  At 7%, you’ll pay $558,000 in interest.  A difference of $513 a month for 360 months. 

The point is, IT’S NOT THAT BIG OF A DIFFERENCE.  $18 a month on a $25,000 car.  $513 a month on a $500,000 home.  Yes, sure, $500 a month is not meaningless, but it’s not the, “oh my gosh I might hurt my credit score what am I going to do?” doomsday heart palpitations that so many people have when they even consider the notion of their credit score being under 700, or under 600.

If you already own your home and don’t intend to borrow money for any big ticket items in the near future, your credit score becomes even less of a factor in your overall financial picture.

When I had an 800 credit score, I was able to get over $200,000 in credit to pursue a business venture.  When the business venture didn’t work out as planned and I couldn’t meet my monthly interest payments on my cards, a bankruptcy attorney told me about the process of negotiating settlements on credit card balances, to pay them off for less than the amount owed.  My first question was, “how will that affect my credit score?”

In about six months of settlement negotiations, I reduced my credit card debt from $212,000 to $30,000 and I had $115,000 in debt written off.  This reduced my credit score by about 200 points, to just over 600.

But I had $115,000 in debt written off, not to mention all the interest I would have paid on the $212,000 in debt at 18-29% over years of minimum payments.  I couldn’t buy enough new cars in my lifetime at 2 or 3% higher interest to add up to more than I saved by settling my debt. 

Had I been the homebuyer in the example above, I would have paid $185,000 more in interest over 30 years, compared to saving $115,000 in six months.

The point is, if you’re in debt, debt settlement may be a viable option that will save you more money in the long run that you’d save by having a higher credit score and paying a point or two lower on your next car loan.

I’m not suggesting that anyone abandon their credit score to the wind and adopt unsound financial habits. I am suggesting that in the conversations you have with your attorney, accountant, spouse and self, give credit score considerations their proper due.  They are a single part of a large financial equation, not the end-all, absolute factor that your lenders and silly television commercials would have you believe.

Credit Score Repair – How You Can Fix Your Credit Score

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If you were denied of a mortgage or a charge card, it may have something connected to an important number that will determine if you’re credit score worthy. This number is called your credit score. This number is what lenders, for example banks and credit card companies will look at to be able to know if you will possibly reimburse them or not. When it is low you know you require Credit Score Repair.

Your credit score means everything in today’s society. It is a factor that creditors and loan companies will base on regardless if you are worthy to obtain accepted for that bank loan you’re applying for and it’s also something which will determine your credibleness to particular business employers and to land lords.

It’s a truth that numerous people don’t know that lenders have access to this info. Nevertheless, you have to understand that this information will act as a security regardless if you are a person who is credit worthy or not. They get this numbers from credit score reporting agencies that also gets info of your credit score history from the past lenders you borrowed money from. If you haven’t been capable of paying your bills promptly, it will lower your credit score. Having a poor credit score or a lower credit score, it will lessen your chances of obtaining the greatest credit card and mortgage deals.

With a good credit rating, you will be able to apply for loans and credit cards effortlessly. It’ll imply that you will have more chance in getting that bank loan you’ll need. It’ll also mean that you may have much more opportunity in getting that certain job you have been applying for and it will also imply that you could spend your expenses on time with the landlords when you’re applying for a condo.

Having a poor credit score reduces all these opportunities. You may get approved for a credit card or a mortgage, but it’ll usually have greater interest rates. The reason being creditors aren’t certain that you can spend your bills promptly. It is also riskier for creditors to approve you for the mortgage if you have a poor credit. With regards to applying for an apartment complex, landlords check out your credit score to figure out if you’re able to pay your rent and utility bills.

These are some of the factors why getting a great credit score is very important in today’s society. However, what for those who have a poor credit score? If you have a poor credit score, it is crucial to repair it as quickly as possible. There are several ways that you can go about your credit score repair.

The first step in going about your credit score repair is by stopping it before it gets any worse than it is already. To do this, you should spend your previous overdue debts right away in order to cut off bad credit reports from lenders. Although this will not improve your credit score, it’s the very first action you ought to consider when you want to fix your credit score.

The next step to in going about your credit score repair is to open a new savings or checking account. You should also obtain a secured credit score card. A secured credit card will mean a higher interest rate, but it is also a good way to control your spending and also a great way to increase or repair your credit score. By paying your monthly credit score bills promptly, you will be able to raise your credit score substantially.

If you continue to do these things, you’ll eventually i believe credit rating. Nevertheless, your past credit score history that consists of a bad credit score and poor credit score background won’t expire until it reaches 5 to 7 years. You need to remember that it will require some time and patience so that you can increase your credit rating.

For those who have an unusually low credit score, ask for a credit score record from the 3 main credit score bureaus. As a result, you can know about your credit history and compare every report and figure out if it consists of errors which may be hurting your credit score. For instance, if you noticed that a specific report consists of an unpaid debt but you previously paid it, you must correct the error by sending a letter and also the proof which you paid the debt in full. Errors like this can reduce your credit score. Using this method, you will be able to increase your credit score in matter of thirty days. You ought to understand the fact that credit score bureaus are responsible for correcting any mistakes in your credit score report and you ought to also know that it’s within the law that they should.

Additionally, there are businesses who you are able to spend to assist you go about your credit score repair – but many record that they are not of much use and allow you to do all the function anyway. You are able to find a software based system that you work via your credit score repair, but that’s beyond the scope of this article. Please check out our info box for links to a more comprehensive overview of assisted methods of repair your credit score.

Free Credit Score – Drastically Improve Yours in 12 Months.

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A credit score is a snapshot of your financial story and is used to assist in deciding your credit worthiness.

Companies who provide credit may use this score to help determine if you qualify for loans, credit cards, utilities or other credit as it tells the likelihood of you paying your bills.

If you are approved for credit the organization who approves you may also consider your score when determining your interest rate and credit limit.

As a method to define if you are responsible with money lots of employers and landlords will search your credit report as well.

Federal law in the United States grants every resident one free copy of their credit score every twelve months.

The 3 key credit bureaus; Experian, Equifax and TransUnion use slightly different algorithms in arriving at your credit score so you may have a variety of scores at each of the three bureaus. Getting your credit score from each of the three credit bureaus becomes important once you know they all use different scoring models.

The Basic Makeup of a Credit Score

The following is the estimated breakdown of how a credit score is arrived at:

* 35% is your history of paying debts. Paying bills such as mortgage, auto loans or credit cards behind schedule may decrease your score. Making your payments on time will over time advance your score.

* 30% is attributed to credit utilization. This is the ratio of your total credit in use compared to the total credit limit available. Your score can be improved by paying down some debt which in turn lowers your utilization ratio.

* 15% goes towards credit history length. If you pay your bills on time then as your credit history increases in age so will your credit score.

* 10% based on variety of credit used. By implementing diverse forms of credit like installment, revolving and consumer finance you can also promote your score.

* 10% Numerous applications for credit. By taking out numerous credit applications or inquiries in a short timeframe you can also negatively affect your credit score. Make a point of spreading out your credit inquiries over time.

Credit Score Range

The range of credit scores is from 300 to 850. Approximately 60% of scores fall between the 650 and 799 range. History shows the median score to be 723.

Best Reasons to acquire Your Credit Score on an Annual Basis.

* If you will be making consumer purchases in the near future

* If you are wanting to secure a lower interest rate for an current loan or if you will be applying for a mortgage.

* So the next time you make a vehicle purchase you can be sure to receive the best possible interest rate.

* To prepare yourself for any feedback you might receive from a potential new employer/landlord who may likely investigate your score.

* To insure it’s proper.

* To monitor for potential indicators of identity theft/fraud.

The reasons for getting your credit score listed above can have a significant affect on one’s finances so this is worth taking seriously.

With internet access around every corner, access to your free credit score has never been faster or easier allowing you insights into your credit history, your credit worthiness, your credit potential and the power to insure the information included on your report is correct.

To instantaneously receive your credit report merely fill in your basic personal info like address, name, social security number and date of birth and then hit “submit”.

Considering the simplicity of acquiring your credit score and the fact that it’s free means there is no longer any reason to not get yours today.

Click here to instantaneously download your free credit score.

What Is A Good Credit Score

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I get asked all the time, what is a good credit score, and like everything else in life, my response is, it depends. For most people a credit score above 700 is generally considered to be a good score, but if you are emerging from bankruptcy, it may take a while to raise your credit score above 500. At the higher end of the spectrum is a credit score above 800. In the old days, AKA, six years ago, an 800 credit score was pretty common, but not anymore. The credit score range is 300 to 850 and most consider anything above 700 to be good credit. The problem is that each agency has their own way of calculating a credit score.

Then, there is the question of which of the three major credit reporting agencies are you talking about?

Before we begin, please try to remember that you are not your credit score. Yes, you may have had hard times. You may be the victim of an economic downturn and you may have even fallen behind on your bills, but a credit report score does not define the person you are. It is merely an indicator of how likely it is that you will be a good credit risk in the future. Credit scores are dynamic, which means they change every day. Yesterday’s 500 might be tomorrow’s 600.

Here’s a refresher on your question, what is a good credit score.

There exist three major credit reporting agencies in the United States. Each is charged with gathering and reporting the buying and spending habits of individuals who use credit. Since most people are not able to plunk down cash for large purchases, like a home, people rely on the leverage of credit for ownership. This type of spending extends to every day purchases too. Cars, electronics, travel and college, are items being financed. Interest rates are issued depending on risk.

The three major credit reporting agencies are Equifax, Experian and Transunion. If you purchase anything on credit, your credit report score will be recorded in one or all of these databases. Though your score will never be the same from each, your spending habits as well as how timely you pay your lenders are part of the credit matrix which ultimately is defined by a credit report score.

Listed below is a rough explanation of the credit score scale and how your credit report scores are determined. Keep in mind that you are in control of your credit score. Depending on how you handle your finances will determine how much you pay in interest rates.

Approximately 35% of your score is based on your payment history.

Are you late in paying your bills or are you on time? Have you filed bankruptcy? Keep in mind that certain consumer debt, like credit card purchases, are amortized daily. This debt is deadly and best paid earlier than 30 days.

Approximately 30% of your score is based on how much you owe.

There is a formula used that calculated the amount of debt you are allowed to have and how much of that credit you have used up. This ratio is very important as it tells an important story of how well or poorly you are living. If you are relying on credit to finance your lifestyle or if you are a casual user, this is important to lenders. Try to keep this debt to credit ratio under 30%. That means if your credit card limit is $5000, don’t carry a balance of more than $1500 at any given time.

Approximately 15% of your score is based on the length of your payment history.

How long you’ve been at the game of credit is a factor used to determine your credit score. A longer credit history will be a plus as long as you show responsible debt management.

Approximately 10% of your score is based on new credit.

Old credit is better than new credit because it shows history and like a favorite old shirt, the lenders are comfortable with the familiar. A question that keeps coming up is how new credit checks affect your credit score and the answer is that they usually drop slightly. Except when you are shopping for a home mortgage, you can expect that by opening new credit, your score will be affected. If you are shopping for a loan, do so in a fixed period of time and the reporting agency will note this.

Approximately 10% of your score is based on miscellaneous factors.

What type of credit do you carry? Installment loans? Revolving credit, credit cards and auto loans, home loans and various lines of credit. Usually this has a stabilizing effect on your credit score because it is normal for people with longer history to carry these types of debt. Certain loans, like jewelry and last resort types of credit will decrease your score.

You can get assistance if you feel you have been treated unfairly in matters of credit. By law lenders are not allowed to consider race, religion or gender in evaluating your credit applications. Your credit scores too will not be based on these factors and if you believe you are being discriminated because of these, contact an attorney.