Getting an annual Free Credit Report
is important in this age when credit is important not only when buying a house but
even when seeking employment,
There are businesses that exist
solely to scrutinize your credit history. Credit card companies and other
lenders rely on this information, so your credit score determines your chances
to borrow money — and how favorable the terms will be.
A Crash Course in Credit Scoring
There are three major
credit-reporting agencies: Equifax (www.equifax.com), Experian
(www.experian.com), and TransUnion (www.tuc.com). The website of each details
how to get a copy of your report via mail or Internet. Be sure to order one
from all three.
Until recently, credit scores’
calculations (and how to improve them) were literally a secret. Fair, Isaac
& Co. is the company that blazed the credit scoring trail 40 years ago, and
— under pressure from consumer groups, Congress, and lending institutions —
they recently decided to provide credit scores and guidance on their website
(www.myfico.com).
Credit scores can range from 200 to
above 800. Scores below 620 are considered risky, but 720 and above should
afford you excellent rates and terms for any kind of credit.
There are five categories used in
determining a credit score:
1. Payment history (35% of total
score): Late payments and amount owed are the two areas scrutinized most
closely. What you may not realize is that recent late payments are more
detrimental than those from years before. According to Fair, Isaac, “A 30-day
late payment from last month will count more than a 90-day late payment five
years ago.”
2. Amount owed (30% of total score):
Large outstanding balances on your accounts do not necessarily damage your
score. The significant factor is the percentage of total available credit
you’re using on your credit cards. A common mistake is to consolidate many
small credit card balances onto one card. This will actually cause your score
to go down because your credit line on the one card will be closer to your
credit limit.
3. Length of credit history (15% of
total score): If you’re just starting out, you know that you need credit to get
credit. There’s no way to improve this part of your score other than to wait.
Logically, it makes sense for parents to establish a credit card in their
child’s name just to get the ball rolling.
4. New credit (10% of total score):
Applying for too much new credit in a short period of time is the most common
and costly mistake most consumers make. While it counts for only 10% of your
score, your score still drops when too many companies request your credit
report in a short time. Note that if you request your own credit report (a
“consumer-initiated inquiry”), it doesn’t count against you.
5. Types of credit (10% of total
score): This category considers the overall mix of the credit you carry — installment
loans, mortgages, revolving credit accounts, etc. Unfortunately, this category
remains shrouded in mystery. Fair, Isaac won’t disclose how the various types
of accounts are weighted.
Credit bureaus give your score to lenders along with “reason codes” which explain why your score is what it is. Examine these reason codes; they’re the keys to improving your credit score.
Deciphering the Credit Report Code
With your credit report in hand,
give it a thorough review. Check these items for timeliness and accuracy:
Check that all items included in the
credit report are factually correct. If there are incorrect entries, notify the
credit bureau in writing. Include copies (never originals) of documents that
dispute the incorrect entries. Send the whole packet by certified mail to
provide proof that the credit bureau received the information. They have 30
days from receipt to adjust or verify the incorrect data.
Check that all items are yours. If
you have a name or Social Security number like someone else, it’s possible that
his or her information will be attributed to you. Remember that even if that
person’s credit is better than yours, you still have an obligation to correct
the information.
Look for inactive accounts that
remain open. Close any accounts you don’t use.
Check for late payments. Those from
more than seven years ago can be removed from your record at your request.
Look over the list of your accounts
and verify the numbers.
Verify correct address information
and Social Security number.
How to Improve Your Score
First, pay your bills on time.
Reduce outstanding debt, especially high-interest credit cards. Build up your
savings.
Don’t fall for schemes that help you
create a new credit identity. It’s illegal, and purveyors of these schemes
incorrectly tell you that they’re invisible to creditors.
Wait to Buy Big Ticket Items Until you Buy Your Home
If you plan on purchasing a home wait until you buy it before buying big ticket items on credit because this can negatively affect your credit big time.
Wait to Buy Big Ticket Items Until you Buy Your Home
If you plan on purchasing a home wait until you buy it before buying big ticket items on credit because this can negatively affect your credit big time.
There is no quick fix to improving
your credit; stay the course and you will see improvement.
Mortgage Payment Calculator Mortgage Amortization
Cashback Credit Card Capital One get $500 see Details
Text or Call 954-648-6095
Click Here to Contact Us
Stay Safe and Healthy
Visit our Website: www.SouthBrowardHomesbyTony.com
Antonio Ortega LLC Licensed Real Estate Professional
Global Luxury Realty, LLC
Click Here to Contact Us