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Improve Credit Score Quickly

August 12th, 2008 Subscribe To Our Feed

If you have ever had trouble getting a loan or a credit card from a financial institution or bank then it could be that you have a low credit score. Most people are aware that the credit score that you have can make a huge difference to the type of credit you can get and how you are treated by people that may lend you money. This article will look at how to improve your credit score in an fast and effective manner.

So what exactly does a poor credit score mean ? Well, in the eyes of the banks, it means you are a credit risk. You can’t be trusted to pay back any credit that you may borrow from a bank or other money lending institution. Consequently they are hesitant to give you credit. If they do give you credit, they try to balance what they perceive as a risk by increasing the interest rate on the credit or limiting the amount of money you can borrow. Whatever they do, it generally means you are out of pocket.

Credit scores are recorded by credit agencies. There are three main agencies that perform this function. They arrive at this score by recording all the past transactions of an individual. This includes credit card transactions, mortgage repayments and various loans and bills.

If you haven’t been able to pay your bills on time, defaulted on loans, had a repossession or failed to pay credit card debt then you will have a bad credit score or a low credit score

Many people may not be aware that creditors have access to this information. However, you have to realize that this information will act as a security whether you are a person who is credit worthy or not.

You need to look financially responsible in the eyes of the credit reporting agencies. So, here are some simple tips to raise your credit score quickly.

The first step is to find out what your credit score is. You can ask for a free report from each agency once a year. Apart from finding out whether you have a low or poor credit score, you can also look at all the transactions that have been used to give you this score.

Although it is unlikely, your poor credit score could be the result of credit card fraud or identity theft. Someone may have used your identity or credit card to buy items and put you in debt. A far as crime goes, identity theft is a growth industry so it pays to check this out. Indeed, even if you have a good credit score, you should check your free credit reports for potential identity fraud from time to time.

Another factor about checking the credit score is that an error may have been made that is contributing to your poor score. By looking through the transaction details you can clear any errors up.

With your history sorted out, you want to start focusing on the present and the future.

If you have any debts, be they credit card or loan debts, make some firm plans to eat into this debt. Work out a budget so that you can divert some of your monthly income towards the debt. You don’t have to pay it all off at once. Just make it obvious that you are addressing the debt and this will translate through to your credit score.

For example, if you have a credit card debt, you don’t have to pay all of it at once. The point to all this is to pay down your credit card debt up to the point that it will not have a balance that exceeds 50% of your credit limit.

And possibly the most important thing to raise your credit score is to pay all bills on time. Credit agencies will not have anything negative to report if you do this and this will raise your credit score rapidly. Paying bills on time involves being organized on two fronts. The first is to not extend yourself – live within your means. Develop that budget that was mentioned above so that you stay in the black each month.

The second organizational skill is to know what needs to be paid and when. Some people consolidate debts into one lump sum to make this easier to do. This may be an option for you, but the first task is to record all the payment dues dates on any debts and put money aside for this payment. Missed payments increase your debts and lower your credit score.

Understanding Credit Report Score

April 21st, 2008 Subscribe To Our Feed

Whenever you try to get credit, be it a credit card, a store card, a car loan or a mortgage, there is a good chance that your credit score will be reviewed. A simple definition of your credit score is the odds that financial institutions put on your ability to pay back money they lend to you. The higher your score the more reliable you are and more likely to pay back the money. This score is derived from the information contained on your credit report. This article will help in your understanding credit report score.

Your credit report is a breakdown of all your financial details for the past seven years. The exceptions to the seven year rule includes some good credit information (like closing an account that was in good standing) and not so good information (like a Chapter 7 bankruptcy discharge) - both of which stay on your history for ten years.

Credit report companies take the information on your credit history and use a formula to determine a three digit credit score that lenders then use to help determine if you will get a loan and at what interest rate. Up until recently, the process that was used to determine the score was an industry secret. In 2000, a California law gave applicants the right to see their credit score, and the new federal laws give you even more rights to your own information (and to the factors that determine your score).

The breakdown of your credit score is fairly easy. The number ranges from 300 to 900 with approximately 35% of that number being based on payment history, 30% on outstanding debt, 15% on the length of time you have had credit (the longer the better), 10% on the number of inquires on your report, and 10% on the types of credit that you currently have. The companies then compare this to credit performances of other consumers with similar histories and profiles to reach your magic credit score.

Some tips to help your credit score:

• Keep your rotating credit to 25% of your limit.

• Pay bills and monthly credit charges on time - paying early is even better, although it doesn’t affect your credit score.

• Shop for loans (mortgages, car loans, and other loans of that nature) during a specific period of time - like a 30 day period. These will show up as one inquiry if done in this way.

• Avoid misuse of your credit score by identity thieves. Check your credit history at least three times a year. You can access a free credit report through www.annualcreditreport.com. This will detail your financial transactions over the past quarter and help you identify any activity that does not look right.

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