How does your credit score affect you?
|
• |
It impacts important life decisions such as your ability to rent a new apartment, your ability to purchase a home, and in some cases, if you get offered that new job. |
|
• |
It affects your day-to-day financial management because it impacts such factors as your credit card interest rate and limits, auto insurance rates, mortgage interest rates, and your overall buying power. |
|
• |
A high score saves you money - thousands on a car purchase and possibly tens of thousands on a home purchase! |
|
• |
Good scores lead to increased buying power and more options - you don't have to wait until tomorrow for what you want today. |
|
|
|
What affects your credit score?
|
• |
There are several factors that affect your score. Some of the most important factors include your payment history (and the presence of derogatory information if any), the length of your history, and available credit versus credit used. |
|
• |
The types of accounts you establish affect your credit score. Your credit mix can include credit cards, charge cards, and various installment loans such as automobile, home and even student loan accounts. |
|
• |
The amount of times you seek new credit can have a negative affect. Each time a creditor evaluates you to grant credit, they pull your credit report, which results in an inquiry on your file. |
|
• |
Your places of residence, age, sex or other possibly discriminatory factors do not compute into the algorithm to determine your credit score. |
Score Building Techniques
As with many things, applying the correct principles will render good results. As mentioned before, many factors contribute to your credit score and our company specializes in teaching these methods. Some of the more basic techniques are:
|
• |
Pay your bills on time, pay more than the minimum and don't use all your available credit. |
|
• |
Learn how to negotiate better terms with your current creditors for higher credit limits and lower interest rates. |
|
• |
Learn which creditors will cater to you as a customer and will fit your needs. This will open more doors to healthy credit relationships. |
About FICO® Scoring
|
• |
More than 75% of the applications for credit in the United States are determined by this scoring system. |
|
• |
FICO stands for Fair Isaac Corporation. This company is credited for the development of the numeric system to measure a credit report's risks using a three digit score ranging from 300-850 (moving from poor to excellent credit). |
|
• |
Fair Isaac Corporation provides a credit score for each of the major credit reporting agencies. Because of the variations in information collected by each agency, you will have a different FICO® score associated with your TransUnion, Equifax, and Experian credit reports. |
Myths About Credit and FICO® Scoring
|
|
Myth #1: Closing unused credit card accounts will help your score.
Actually, closing accounts could lower your overall utilization, which in effect hurts your score.
|
|
|
Myth #2: Having no late payments on my report automatically gives me a high score.
Well, that would be great, but the FICO® scoring models takes into account many factors to arrive at your score. Having no late payments in your credit history still does not guarantee a high score.
|
|
|
Myth #3: Paying a past due debt removes it from your credit report.
No it does not. Your credit report is a history of your credit performance. Just because you finally pay an old debt, this does not erase or change the fact that at one time you were not paying it as you agreed.
|
|
|
Myth #4: Information on your credit report cannot be changed.
It most certainly can be changed. Remember, credit bureaus do not own your information - they only record it. In fact, the Fair Credit Reporting Acts require that information be changed or removed if it is not accurate or cannot be verified.
|
Click here to get started. |
