Credit Score

How to hurt your credit score

Gone are the days when lenders gave to credit to anyone who asked. Today, the rules are tightening up and the lenders are closely looking at your credit report before deciding on giving you that loan. In these economic times, one should have the best possible credit report and score. Believe it or not, many people do things to their credit report that simply hurt their score and lower their chances of obtaining loans or credit cards.

If you’re thinking about borrowing in anytime soon, make sure that you do not do any of these mistakes that will hurt your credit score:

Closing accounts
If you want your credit score to plummet faster than a c list celebrity’s status, simply close some of your accounts! By closing your account, you’re cutting away at your available credit and also increasing your debt to credit ratio.

The credit scoring system isn’t built around common sense as you assumed. A lot of people think that closing an account that is paid off or barely used is a good thing, but they’re wrong! When an account it closed, the available credit on that closed account no longer adds to your total available credit.

A good chunk of your credit score is determined by the ratio of debt to credit. The lower your debt to credit ratio, the higher your score. As a rule of thumb, don’t close accounts, especially if they have a high available balance. Simply pay off the balance and leave the account open. If possible, keep the account active by making small purchases every now and then simply to report history.

It is a good idea to close accounts only when their available credit is low and if they’re new accounts. It is especially good to close accounts if the above criteria match and the cards have a high interest rate or charge annual fees.

Not using credit cards
A lot of the credit card companies are closing accounts that aren’t being used. That’s right; they’re taking on a use- it or lose-it mentality. In these economic times, credit card companies are afraid of just letting anybody sit on a pile of credit.

If you have an account that has a lot of history, it is a good idea to keep that account active by using it every so often. If your account gets closed, it lowers your total available credit and could cost your some points on your credit score.

Credit Score

Improve your credit score quickly

Are you looking to get a loan or a new credit card but having troubles qualifying because of a bad credit score? You are not alone. Thankfully, there are a lot of things you can do to help increase your score. By doing this you can improve your score, which will allow you to qualify for more loans and to pay lower interest rates for the loans you do get. None of the actions we are listing are miracle fixes, but they can help.

Before we look at solutions, let’s take a second to understand how to avoid the problem in the first place. There is a simple way to keep your credit score good in the first place - pay your bills on time, only get new credit when you need it and keep your balances low.

If it is too late for that, here is what you can do. To begin with pull your credit report to see what your score is. Make sure that everything that is reported on your report is accurate - that the accounts are actually yours, that the amounts are correct and that paid off debts are shown to be paid off. Quite often you can improve your score just by fixing any errors which appear.

Once you have done that, the next best action is to pay down your credit card balances. You can make a big difference in a fairly short time just by lowering your credit card balances.

Make sure that your bills do not go past 60 days due. It is at this point that most companies report to the credit bureaus. By paying on time you can avoid this. If you have lots of late payments in the past you can still improve your score by paying all your bills on time from now on.

One mistake people make is to close out unused credit accounts. This is a very bad idea. By closing out these accounts you are decreasing your total debt capacity, so you look like you are using more of your available credit. This looks bad. Once you have an account, keep it open. If you don’t want to use them anywhere, just put the cards away in a drawer.

If you have one card which is close to maxed out and another which is empty, transfer some of the balance from the full card to the empty one. Your score will be better if your balances are even and less than half of your available credit than they will be if you are maxed out on any accounts.

These tips will help you make your credit score look better for lenders.

Credit Score

What exactly is a FICO score?

For those of you who do not know, your FICO score is a 3 digit number that determines the amount of interest you will end up paying on your credit cards, auto loans, and mortgages. On top of that, your FICO score can also play an important role in determining whether you will get that new cell phone contract or whether you will get the apartment you always wanted.

Just about every financial decision you make will revolve around your FICO score. If you do everything you can to protect your score, you will be rewarded with low interest rates. If don’t take care of it, expect it to lash back at you by making sure you get the highest rates and frequent credit rejections.

FICO stands for Fair Isaac Corporation. The Fair Isaac Corporation is the company that created the FICO formula.

To the business world, your FICO score is an indication of how well you will do at handling your loans and credit cards, or whether you are a solid candidate for the job or apartment you are requesting.

With a high FICO score, you can expect a great reputation with the business world; you will get the best of the best deals. A low FICO score translates into paying more interest rates on credit cards and loans.

Your FICO score is based on the way you spend, your bill-paying habits and your overall debt load. The people you do business with, from lenders to credit card and phone companies constantly report on your financial activity to one of the three major credit bureaus.

The formula for your FICO score is determined by the following 5 categories:

Record of paying bills on time	35%
Total balance on your credit cards and loans compared to your total limit	30%
The length of your credit history	15%
New accounts and recent credit applications	10%
Mix of credit cards and loans	10%

Your FICO score can range from 300-850. If you your score is between 300-500, you have bad credit. Obtaining credit is going to be very hard for you. If you do obtain credit, the interest rates are going to be very high.

The range of your credit score will ultimately decide what type of rate you get. On a 30 year fixed-rate mortgage, that can mean a 3.5 point difference on your interest rate. On a four-year car loan it can mean a 10 point difference on your interest rate.
On a 30-year fixed-rate mortgage, a FICO score of 720-850 will typically get you a 6% interest rate while a score of 500-559 will typically get you a 5.9% rate.

On a four-year auto loan, a FICO score of 720-850 will typically get you a 5.1% interest rate while a score of 500-589 gets you a 15.8% interest rate. That difference equals an extra $4,944 for that four year loan.

You see the importance of your FICO score. Treat your credit with respect. A good score will get you great rates. A bad score will haunt you for a long time. Take care of yourself and your credit.

Credit Score

5 Steps to improve your credit score

It’s about that time. You have finally taken a look at your credit report and you cannot believe how low your credit score ranks.

Maybe it is because you missed a few payments last month. Maybe it is because when you were in college, you didn’t take proper responsibilities when it came to your personal finance. What ever the reason may be, it is not over. There are still a few steps that you can take in order increase your credit score.

For those of you who have yet to be initiated, your credit score is a 3 digit number that creditors use to determine your creditworthiness. Employers, insurers and landlords sometime use this number to evaluate applicants. This number ranges from 300 to 850. A small percentage of the population, 11% to be exact, have a credit score above 800. 29% of the population have a score between 750-799.

With a score over 700, you can generally see the difference in interest rates when applying for credit. A whopping 30 million Americans have a credit score of 620 or lower. A score that low will get you higher interest rates and the term “bad credit”.

Before you apply the 5 easy steps to improving your credit score, you must first get a copy of your credit report. You can obtain a copy of your credit report by visiting the Credit Report section of this site. Once you have obtained a copy, peruse it for incorrect information. If you find incorrect information, make sure you contact the credit bureaus to correct the discrepancies.

1. Pay your bills on time

I cannot stress the importance of this rule. Payment history is the largest contributor to your credit score. 35 % of your credit score is determined by your payment history.

If you are going to be late for a payment, do not let it go late for more than 1 payment period. Most creditors will charge you a late fee if one payment is missed, and not report the late payment to the credit reporting agencies. If 2 payments are missed in a row, expect it to show on your credit report.

Tip: A good way to not forget about paying your bills on time is to set up some type of automatic bill payment. A lot creditors offer this option. If it isn’t an option, many banks have the option for recurring online bill payments.

2. Reduce your debt and spend less

Reducing the amount of money you owe means that you are able to pay your bills and that you are financially responsible. When creditors see low balances on your credit cards, they know that you are trustworthy and they know that they can expect a payment from you when it’s due. By spending less, you will be able to maintain a low balance on your credit cards.

Tip: If you plan to apply for a car loan, mortgage, or major credit account in the coming year, start paying down your balances now. If you are one of those people who charge in order to gain rewards, put that habit away for a while. The low interest rate you will receive from your higher credit score will be a boon compared to any reward.

3. Do not close old, paid-off accounts

Closing your old accounts is not going to help you one bit. In fact, it might even lower your score because it makes your balances appear larger when your credit score is calculated. Closing your oldest accounts can shorten your credit report and make you appear less credit-worthy.

Tip: Since opening to many credit accounts and closing your old accounts can be detrimental to your credit, apply for credit when it is absolutely necessary. Think hard the next time that store clerk offers you a 10% discount if you get a store card.

4. Credit counseling is good

Do not be afraid to set up a debt repayment plan with credit counseling agencies. Contrary to what has been said in the past, signing up for debt repayment through a credit counseling agency will not decrease your credit score. In the past it used to, but today, people who sign up for these plans are no more likely to default or go bankrupt.

Tip: Don’t confuse credit counseling agencies with debt settlement firms. Debt settlement firms will actually lower your since you are paying less than what you owe. Be very careful.

5. Do not file for bankruptcy

Stay away from a bankruptcy. This is the absolute worse thing that you can do to your credit. It is worse and paying late and collections. Bankruptcy can knock 200 or more points from your credit score if you had good credit. If your credit was filled with delinquencies and other negatives factors, your score will drop, but not by so many points because you were already low. Bankruptcy pushes your score below 620. Once your score is below 620, credit becomes harder to obtain and interest rates sky rocket.

High interest lenders love bankruptcies because they know that once you have filled, you cannot file again for six years. The main stream lenders will generally reject applicants with a bankruptcy on their records, which on average lasts 10 years.

Credit Score

About your credit report score

Ah, the credit report score. You’ve heard about it and read about it. YOu know that it has something to do with credit and what you’ve done with it. But what, exactly, is it?

The credit report score is a number between 300 and 850 that is used to reflect what kind of borrower and payer of obligations you are. It is called a FICO score. But, really, since FICO doesn’t really tell us much, it is much more descriptive to call it a credit score.

850 is the best credit score you can get on a report. There are very few people who have an 850. Most lenders, however, agree that a 625 is pretty decent. You start running into trouble when you dip below that score.

How is the Credit Report Score Figured?

With math. Really interesting math. But really all you need to know about how the score is figured from your credit report is what you can do to keep it at a decent level.

The score is derived from a combination of factors. Your debt-to-income ratio matters. This is how many obligations you have as compared to how much money you have coming in. Sometimes your rent payment can be a factor, as this is a regular obligation that is paid. Also considered is whether or not you pay on time, and the full amount required. Late payments lower your credit score, and someone looking at your credit report will not fail to notice this. Bankruptcy and skipped payments, like an unpaid energy bill also appears on the credit report and affects your score.
Why Should I Care Whether My Credit Report Score is Good?

Simply because it can affect whether or not you get further loans. While there are ways to get nearly anything with bad credit (TVs, furniture, even cars), one thing that is very difficult to get a loan for when your credit score is low is a home loan. If you want to own a home, you better care whether or not you have a good credit score.

Additionally, your interest rate on loans you do obtain is determined by the score that appears as a result of your credit report. Even if you do get a loan, you may be paying so much in interest charges that it is hardly worth it. The lower your credit score, the higher your interest rate.
Ways to Improve Your Credit Report Score

Keeping your credit good, and even improving your score, is relatively easy with some financial planning and a little discipline. If you carefully manage your money and decide what you need and what you can do without, you can live within your means and avoid taking on so much debt that you get in over your head.

As long as you make your payments on time, you should be in good shape. Paying bills in a timely manner is essential to maintaining a good credit score. Keep your credit card balances low. By paying more than the minimum each month, or paying them off, you show that you are capable of using debt wisely.

Your credit report score is a very important part of your finances. Make sure you take good care of it.

Credit Score

A few good reasons to view your Experian credit report

An Experian credit report is a file that contains all aspects of information relating to your credit. If you have bad credit, it is important to view your credit report for several reasons.

The first reason you should view your Experian credit report is to ascertain if you do indeed have bad credit! You may think you have bad credit, but you will not know for sure until you see a copy of your credit report. There are three major credit report agencies. Experian, TransUnion, and Equifax are all credit agencies. You can obtain a copy of your credit report from any of these.

The easiest way to request a copy of your credit report from Experian is by visiting their website and buying a copy of your credit report and score. This typically cost around $15. If you’re not ready to put $15 down, you can get a free copy of your credit report from Experian by visiting annualcreditreport.com. Another way that you can get a free credit report from Experian is if you’ve recently been denied credit. If you recently applied for a credit card and got denied, you might be able to get a free copy of your credit report if the company that denied you the credit used Experian to obtain your credit report.

Once you know if you have bad credit or not, you can begin repairing it. This is another reason you should be interested in seeing your credit report. By constantly monitoring your credit report you will be able to tell if what you are doing is helping or hurting your credit.

Obtaining your Experian credit report also allows you to see exactly how much what you are doing is hurting or helping. The goal of repairing your credit is to improve your score by as much as possible for everything you attempt to do. Viewing your credit report allows you to do this.

If you do not decide to monitor your credit report, you will not be able to tell what effects your efforts are having.

If you are intending to apply for a loan, or any type of credit, it is important that you see a copy of your credit report. This will allow you to determine how much credit you are eligible for, and it will also give you a rough idea of whether or not your bad credit is still good enough to get a credit card or loan.

If your credit is very bad, seeing your credit report will allow you to determine if you are eligible for “bad credit loans”. Overall, there is really not reason NOT to view your credit report, as it can only help you. If you can afford a small fee, you should attempt to obtain a copy of your credit report as soon as possible.

Credit Score

Easy ways to improve you credit by making credit card payments

Too often people find their credit history marred by a late payment on their credit card. It is often easy to forget or overlook the small, but important bill sitting on your desk. Unfortunately, missing this payment will remain with you for a long time, and others will see it! There is no reason to miss a credit card payment, unless there has been some sort of error getting your bill! If you get your bill, pay it immediately. Though it is understandable, sometimes that is not an option. So here is how you can do your best to ensure a prompt payment, and avoid those late fees!

Whenever you get your bill, take a look at the due date. Usually it will be a few weeks  from when you receive your bill. This gives you plenty of time to get your payment in. The key to doing this is pre-planning. Figure out what day is exactly two weeks before your payment is due. Mark it on a calendar, or write it on your forehead, or staple it to your hand (no, don’t REALLY do the last one! ). Whatever you have to do to leave yourself a reminder.

When that day comes around, mail your bill out. By mailing two weeks early, you are making sure that there is plenty of time for your bill to get to your credit card company, even if the mail is slow for some reason!

This also allows you to pay early! Paying your bill early will help you in the long run, in case you do miss a payment for some reason. Not only will other credit cards see that you always pay early, or often do, but your current card is less likely to raise your interest rate in the event of you missing a payment.

Pay More Than Your Minimum Credit Card Payment!

By paying more than the minimum, you are demonstrating the financial security to handle the responsibility of a credit card. On top of this, you will reduce your balance faster. Most cards will have a minimum payment required (usually 10% or $25.00, whichever is greater). By paying an extra 5%, you can be sure that your bill is more than covered.

This, as well as paying early, will also help you in the event that you are late on a payment, or miss one entirely. Your credit card company will see that you always pay more than required, and it will weigh in the decision to raise your interest rate or keep it the same.
Keep Track of Your Credit Card Spending As Well As Your Payments!

Don’t go spending well more than you know you can afford. Over-limit fees can cost you as much as a good-sized purchase can, plus it can show up on your credit report. Staying within the limit protects you from getting in over your head, and ruining your credit.

Combine these three things and you will see your credit score grow better and better. Responsibility is required when dealing with a credit card, so show that company you have some, and the benefits will be enjoyed by them and you!