What is a credit score
A credit score is based on information in your credit report, which serves lenders to evaluate your creditworthiness in the process of deciding whether to approve an application for credit or loan number.
Think of your credit score and a score that shows how responsible was about managing your credit and finances. A good credit score indicates greater solvency, while a bad credit score makes lenders hesitant to extend credit to.
Having a positive credit behaviour, such as paying bills on time and using credit responsibly, you can help build a solid credit history while paying bills late, using credit cards to the limit and other negative credit behaviours can impair its history.
Credit scores are calculated using different methods.
Why has my credit score dropped?
The credit score can change for several reasons. If your credit score drops, it may be one of the following situations:
It was close to use your card (s) (s) credit to the limit.
He used his (s) card (s) to the credit limit.
He applied for a new credit card.
She applied for a new loan.
He applied for a mortgage.
He paid bills late.
A bill was referred to collections for non-payment.
He cancelled a credit card or an account that was closed for a long time.
A credit score is a number. That number is based on your credit history . But it will not be given along with your free credit report , unless you pay separately.
A higher credit score means you have good credit. A low credit score means you have bad credit. Each company has different scores . Low scores are around 300 High scores are between 700 and 850 .
I need to know my credit score ?
It is very important to know the information in your credit report. But a credit score is a number that corresponds to the information in your credit history. If you know you have a good track record , have a good score. You can get your free credit report .
Find out your credit score have to pay. Sometimes , a company may say that the score is free. But if you look closely , you may discover that what service to join a credit check for you. These services charge you every month.
Before paying , ask yourself if you need to see your credit score . It could be interesting. But is it worth paying to see it?
Your credit score is not static; it changes over time as you use your credit, manage and maintains your credit. If you recently learned that you have a low credit score, the good news is that there are ways to improve it:
Solicit and review your credit report filed by the three credit bureaus. Make sure they are correct. If there are any errors, please send a letter requesting that the error be corrected and that they send you a corrected copy of the new report.
Pay your bills on time and pay more than the minimum due.
Reduce balances on your credit cards or lines of credit to an amount less than 75% and preferably at less than 25% of your credit limit amount. Think carefully before transferring balances from multiple credit cards to a card with a lower interest rate. While this transfer may reduce the accrued interest on your debt, you may increase the percentage of debt to your credit limit, and this proves a negative factor in determining your credit score.
Do not apply for too much credit, because the more “hard” inquiries are made to your credit report, the lower your overall score.
Open new credit accounts only when absolutely necessary and only to the extent that they have the financial ability to repay the loan on time. Your goal should be to keep only the amount of debt you can handle and you can cancel.
If you have multiple credit cards or lines of credit and wish to cancel, terminate an account, consider terminating the most recent accounts. Creditors analyze the time that you used the credit so that it can maintain without accumulating high balances credit / debt, keep the oldest accounts open and dismiss the most recent.
Cancel and delete joint accounts or loans (ie, with a current or former spouse or family), particularly if the other cosigner / co-owner of the account is not cancelling its share in full and on time. When a cosigner / co-owner of the account does not cancel its portion of the loan, this has a negative impact on your credit report and credit score. It is important to work with the other co-signers or co-owners of the account to resolve how they can pay the balance or upgrade. If the other person does not intend to repay the loan or part of the balance or can not, you must determine how you could cancel it to prevent your credit report from getting a negative credit signal jeopardizing your score.
While you are entitled to a free copy of your credit report every year, you will pay a fee to get your credit score. If you are thinking of applying for a major loan, it is worth paying the fee to know you credit score in each of the three main offices, with a notice of six months or more, before making any significant purchase. That should give you enough time to ensure your report is accurate and to work on improving your score, if necessary. Some changes cause immediate noticeable differences in your credit score. However, other changes, such as paying bills on time, can take longer.
According to the Law on Equal Credit Opportunity Act (ECOA), if your application for credit is denied, you can require the creditor to indicate the specific reasons for the denial or to indicate the reason if so requested within 60 days of the denial. The reasons must be specific (ie, “do not have sufficient income to repay the loan” or “was not used by a sufficient period of time”). Also, if the creditor cited your credit report or credit score as the main reason for rejection of his application, you may demand the name and contact information for the credit bureau that provided the information used in the assessment of your application. You are entitled to obtain a free credit report from the office that provided the information to the lender if you request a copy within 60 days of the denial of your application for credit; however, you may have to pay a fee to get your credit score report.
Check your credit score can give you the financial security you need to make informed decisions about the opening, maintenance and cancellation of your credit accounts. Those regular decisions:
pay your bills on time,
pay an amount greater than the minimum due, and
maintain debts at a level you can handle, depending on your income and ability to repay borrowed money requested
These tips not only make you have good credit in the eyes of lenders, but will save you significant money to the tune of “risk”. The higher your credit score, the lower the interest accrued probably loan or line of credit. Let’s say you have a credit score relatively high (past the 700 or early 800) and requests that it be granted a car loan for a period of five years in the amount of $20,000. Since having a “good” credit risk, you may meet the requirements to receive a loan at 8%. However, if you do not manage your credit properly (if you pay your bills late, exceeds the limit of credit cards, etc.) and requests the same car loan, the loan may be approved, but at a rate interest of 14%. This high rate of interest would cost $60 extra per month or about $ 3,600 more throughout the loan!
Therefore, make timely payment of invoices a regular discipline and keep credit-related expenses within your ability to pay. Manage your credit properly will allow you to cancel, where appropriate, the need for debt good credit score allows you to fulfill an important goal in life, for example:
buy a home
buying a car
get a student loan
acquire a loan to start a business
If you need to, or want to improve your credit score, start by creating a plan. What are the first steps you can take? For example, you could:
Once a year, request a copy of your free credit report from each bureau to correct errors and acquire the credit score of each office.
Develop a schedule and prepare a workspace for paying your bills on time
Use the online bill payment to reduce the time it takes to pay the bills
Have some bills automatically deducted from your bank account using some function or service “automatic payment” of the creditor
Review the personal or family budget to determine how it might free up some money to pay off debts in current payables
Contact your creditors if you have trouble making payments in order to develop an alternative payment plan or restructure the loan terms (ie, extend the duration of the loan, waive default interest or finance charges, lower interest rate, etc.) BEFORE the account is transferred to a collection agent; once the account is transferred to a collection agency, it is possible that your credit score is adversely affected by up to 7 years, even if you cancel the debt or account updates
By canceling the debt, leave the oldest accounts open, even if not currently used, to prove that he was managing the credit properly over a longer period of time
It may be relatively easy to manage credit properly if you control how much you borrow and how much they charge in relation to their income and ability to pay. Proper maintenance of credit will result in a positive credit report, a high credit score and a rating that allows additional credit in the future at a lower cost or a more attractive interest rate.