There are many approaches to accomplish your best credit scores. Having higher credit scores will not only benefit you when applying for credit but they are also considered by insurance companies and even potential employers. Unfavorable terms or even a job denial may be the result of low credit scores. Follow these simple steps to begin improving your situation now.
When applying for credit it is important to understand what is on you credit report. There is more to it than just your FICO score. FICO is only one part of your combined credit score and is issued by the Fair Isaac Corporation, a credit repository. The other two primary repositories are Experian and Trans Union. The information contained in the reports may vary from one repository to another so it is important to compare them for accuracy. When assessing a client applying for credit a lender will usually take the average of the three scores. The higher the scores the better programs that will be available resulting in lower rates and fees.
Probably the most important action a person can take is to make timely payments on any outstanding credit obligations.Lenders see a low credit score as a red flag that either you have had credit issues in the past or that you may not be able to meet your future obligations. Late payments result in an immediate and significant drop in your credit scores. a second missed payment will be even more substantial. Collection efforts, foreclosures and bankruptcies not only have a significant negative effect but they also stay on your credit reports for much longer, typically 7 to 10 years. Most revolving debt drops off after just two years of on time payments.
Credit scores take time to build up but can be toppled by missed payments or trying to expand credit too rapidly. Over time the individual should be looking to create a balance of credit obligations in different areas of lending. Car loans, revolving debt like credit cards or store cards and even personal loans from a bank or credit union should be in the mix to begin showing depth of credit. By not applying too quickly and keeping the utilization rate down the credit report will show the responsible use of credit and lower the risk to a potential lender.
When making payments towards revolving credit there are a couple actions to take that will result in better credit scores over time. Try to keep the utilization no higher than 50 percent and staying around 20 to 30 percent is better. Secondly always pay more than the minimum payment. This will not only get the debt repaid faster but will save money on interest which in turn can be used to pay down the debt even faster.
Once a year the government allows a consumer to pull a free credit report from each of the big three repositories. By pulling all three at once the consumer is then able to compare them for accuracy. If there are any inaccuracies or changes that need to be made then the consumer can write to each agency requesting the changes. Once the credit bureau makes changes then the consumer is able to get the revised report from them, also for free.
When trying to manage debt if you fall behind or recognize that you may fall behind it is a good idea to communicate with your creditors. Ask if they would be willing to lower your interest rate or even give a longer grace period so you have a chance to get caught up. When a lender offers some sort of forbearance it will not negatively affect your credit scores. If you fall too far behind you may be forced to work with a credit counselor or even file for bankruptcy.
Understanding how to achieve you best credit score is imperative. Once these strategies are accomplished you have probably created new patterns of behavior that will make it easier to maintain your credit scores in the future.
When applying for credit it is important to understand what is on you credit report. There is more to it than just your FICO score. FICO is only one part of your combined credit score and is issued by the Fair Isaac Corporation, a credit repository. The other two primary repositories are Experian and Trans Union. The information contained in the reports may vary from one repository to another so it is important to compare them for accuracy. When assessing a client applying for credit a lender will usually take the average of the three scores. The higher the scores the better programs that will be available resulting in lower rates and fees.
Probably the most important action a person can take is to make timely payments on any outstanding credit obligations.Lenders see a low credit score as a red flag that either you have had credit issues in the past or that you may not be able to meet your future obligations. Late payments result in an immediate and significant drop in your credit scores. a second missed payment will be even more substantial. Collection efforts, foreclosures and bankruptcies not only have a significant negative effect but they also stay on your credit reports for much longer, typically 7 to 10 years. Most revolving debt drops off after just two years of on time payments.
Credit scores take time to build up but can be toppled by missed payments or trying to expand credit too rapidly. Over time the individual should be looking to create a balance of credit obligations in different areas of lending. Car loans, revolving debt like credit cards or store cards and even personal loans from a bank or credit union should be in the mix to begin showing depth of credit. By not applying too quickly and keeping the utilization rate down the credit report will show the responsible use of credit and lower the risk to a potential lender.
When making payments towards revolving credit there are a couple actions to take that will result in better credit scores over time. Try to keep the utilization no higher than 50 percent and staying around 20 to 30 percent is better. Secondly always pay more than the minimum payment. This will not only get the debt repaid faster but will save money on interest which in turn can be used to pay down the debt even faster.
Once a year the government allows a consumer to pull a free credit report from each of the big three repositories. By pulling all three at once the consumer is then able to compare them for accuracy. If there are any inaccuracies or changes that need to be made then the consumer can write to each agency requesting the changes. Once the credit bureau makes changes then the consumer is able to get the revised report from them, also for free.
When trying to manage debt if you fall behind or recognize that you may fall behind it is a good idea to communicate with your creditors. Ask if they would be willing to lower your interest rate or even give a longer grace period so you have a chance to get caught up. When a lender offers some sort of forbearance it will not negatively affect your credit scores. If you fall too far behind you may be forced to work with a credit counselor or even file for bankruptcy.
Understanding how to achieve you best credit score is imperative. Once these strategies are accomplished you have probably created new patterns of behavior that will make it easier to maintain your credit scores in the future.
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