If you ever want to refinance your home, buy a car or make a large purchase on credit you need to be concerned about FICO scores. The higher the FICO score the better chance you have of getting an excellent rate from the bank you will be using. Most people never pay attention to their FICO scores until they go to the bank to make a loan. This score is the first thing the creditor looks at before starting any paperwork on a loan. To get an excellent loan rate your score should be higher than 650. Anything over 700 is considered adequate and will usually work on getting you an excellent rate.
As obvious as it seems, paying your bills on time is very important. Something as simple as one 30-day late payment can stay on your credit report for 7 years. A late mortgage payment can hold you back from obtaining a loan for a year or mean the difference between a great interest rate and a poor interest rate. Also weighted heavily are collections, charge-offs, judgments and bankruptcies. These types of issues generally affect your credit rating in the most negative way. It is certainly possible to have these issues corrected in time. The important thing is to become knowledgeable about your credit in order to correct these issues as well as prevent them from occurring in the future.
By concentrating on your payment history and available credit, you will have the most impact on your total score overall and you'll find that the remaining three variables will simply fall into place. Pay on time and keep your balances at the correct level is your best bet.When you apply for a loan in order to buy the house or car of your dreams lenders will look at your credit score and they will use it to decide if they should give you the loan or not.There are lots of Americans who don't know what a credit score is or how it is calculated. If you belong to this group of people, then don't worry because in this article you will learn all these basic concepts that are necessary to start improving yours and to buy the house or car of your dreams once and for all!
The things that damage your credit score the most are late payments, collections, Bankruptcies, foreclosures, tax liens and judgments. If you have any of these types of credit accounts you will see credit scores in the low 500's and not sufficient to receive a loan from current lenders.It make good sense, if you have a lot of high interest loans, high loan to value credit cards and collections, to refinance your home or take out an equity line and pay off these small loans. This action can raise your FICO score dramatically and make it possible to get approval from a bank for a better loan rate.
A score of 750 or more will give you the best interest rates and the best chance of being approved for a loan. On the other hand, with a of 600 or less you will have a hard time finding a lender who is willing to give you a loan. And if you find it, you will have to pay a lot of money in interest just because of that low score.That's why you have to improve your credit score as soon as possible (if you have a low one or not): To avoid high interest rates.To save thousands of dollars in interest in the long run.And to get the house or car of your dreams at the lowest cost possible.
A healthy mix of different accounts is best. You want your credit report to be comprised of credit cards, mortgages and auto loans. You don't simply want to have credit cards listed on your credit report.When a company pulls your credit report to qualify you for credit, this is called an inquiry. An inquiry will stay on your credit report generally for 3 years. It is very important to limit the amount of inquiries on your credit report. Although inquiries only contribute to 10% of your credit score, too many inquiries in a short period of time makes a consumer appear to be out of money and desperate for credit, and this becomes a risk in the eyes of potential creditors. It also implies to creditors that you may be opening new accounts, which as stated above pushes your credit score down.
The bureaus use the information contained in your credit report to calculate your score. The three major credit bureaus use the FICO scoring system, which ranges from 300 to 850.What Exactly is Your Credit Score Made Of? Your credit score is made of five different parts:Payment History (35%) Payment history refers to the ability to pay your bills on time. It represents 35% of your credit score. Your history is considered the best indicator of your future financial behavior. Late payments, missed payments, loan defaults, unpaid taxes, and the worst of all, bankruptcy, will all hurt your score.It's also important the amount of negative events and when these events happened. Newer events affects your score more than older ones. More severe events (like bankruptcy) are worse than less severe events. And many events hurt your score more than only a few of them.
There is no greater embarrassing moment than the one where you have applied for a loan and it is declined because you have a poor credit score. Such embarrassment is reversible though; there are ways you can get back on the horse so to speak. It is important however to know how you got where you are to know what to do or not to do to avoid falling into the same trap again. As much as you would like to blame it on anyone, a poor credit score is usually borne as a personal responsibility. However, there is always the proverbial light at the end of this especially dark tunnel, here is how:Start from the bottom up,Improving your credit score just like the way everything else begins from the bottom. You need to know how you got there so that you can get out. Consider this as a maze; you have to go back the same way you came to get out of it. When working to improve our credit rating, you have to know what you did wrong so that in future you avoid doing the same thing.
Consolidate.Debt consolidation is usually for individuals that experience difficulty paying off debts to their lending institutions. Consolidation is recommended for such people to unburden them of stress in making many different monthly payments to several different lenders.Examine and re-evaluate.Be your own financial counselor. Do not let financial problems pile up. Rather than awaiting credit rating reports to be mailed to your front door, make your own assessment. By doing this, you are updated concerning your credit reports.
Important: Having different types of credits can help your score but don't go out and get loans if you don't need them. This isn't a significant part in the credit score formula (it only represents 10% of your credit score) so don't get yourself into more debt just to have a better mix of credit.How Can I Improve My Credit Score? Now that you know what a credit score is and where it comes from, the next thing you have to do is to start improving it as soon as possible. The truth is that it won't be an easy task (especially if you have a low one): it will take some time, money and patience but it will be worth it. A few more points could be the difference between buying the home or car that you and your family deserve or not!
As obvious as it seems, paying your bills on time is very important. Something as simple as one 30-day late payment can stay on your credit report for 7 years. A late mortgage payment can hold you back from obtaining a loan for a year or mean the difference between a great interest rate and a poor interest rate. Also weighted heavily are collections, charge-offs, judgments and bankruptcies. These types of issues generally affect your credit rating in the most negative way. It is certainly possible to have these issues corrected in time. The important thing is to become knowledgeable about your credit in order to correct these issues as well as prevent them from occurring in the future.
By concentrating on your payment history and available credit, you will have the most impact on your total score overall and you'll find that the remaining three variables will simply fall into place. Pay on time and keep your balances at the correct level is your best bet.When you apply for a loan in order to buy the house or car of your dreams lenders will look at your credit score and they will use it to decide if they should give you the loan or not.There are lots of Americans who don't know what a credit score is or how it is calculated. If you belong to this group of people, then don't worry because in this article you will learn all these basic concepts that are necessary to start improving yours and to buy the house or car of your dreams once and for all!
The things that damage your credit score the most are late payments, collections, Bankruptcies, foreclosures, tax liens and judgments. If you have any of these types of credit accounts you will see credit scores in the low 500's and not sufficient to receive a loan from current lenders.It make good sense, if you have a lot of high interest loans, high loan to value credit cards and collections, to refinance your home or take out an equity line and pay off these small loans. This action can raise your FICO score dramatically and make it possible to get approval from a bank for a better loan rate.
A score of 750 or more will give you the best interest rates and the best chance of being approved for a loan. On the other hand, with a of 600 or less you will have a hard time finding a lender who is willing to give you a loan. And if you find it, you will have to pay a lot of money in interest just because of that low score.That's why you have to improve your credit score as soon as possible (if you have a low one or not): To avoid high interest rates.To save thousands of dollars in interest in the long run.And to get the house or car of your dreams at the lowest cost possible.
A healthy mix of different accounts is best. You want your credit report to be comprised of credit cards, mortgages and auto loans. You don't simply want to have credit cards listed on your credit report.When a company pulls your credit report to qualify you for credit, this is called an inquiry. An inquiry will stay on your credit report generally for 3 years. It is very important to limit the amount of inquiries on your credit report. Although inquiries only contribute to 10% of your credit score, too many inquiries in a short period of time makes a consumer appear to be out of money and desperate for credit, and this becomes a risk in the eyes of potential creditors. It also implies to creditors that you may be opening new accounts, which as stated above pushes your credit score down.
The bureaus use the information contained in your credit report to calculate your score. The three major credit bureaus use the FICO scoring system, which ranges from 300 to 850.What Exactly is Your Credit Score Made Of? Your credit score is made of five different parts:Payment History (35%) Payment history refers to the ability to pay your bills on time. It represents 35% of your credit score. Your history is considered the best indicator of your future financial behavior. Late payments, missed payments, loan defaults, unpaid taxes, and the worst of all, bankruptcy, will all hurt your score.It's also important the amount of negative events and when these events happened. Newer events affects your score more than older ones. More severe events (like bankruptcy) are worse than less severe events. And many events hurt your score more than only a few of them.
There is no greater embarrassing moment than the one where you have applied for a loan and it is declined because you have a poor credit score. Such embarrassment is reversible though; there are ways you can get back on the horse so to speak. It is important however to know how you got where you are to know what to do or not to do to avoid falling into the same trap again. As much as you would like to blame it on anyone, a poor credit score is usually borne as a personal responsibility. However, there is always the proverbial light at the end of this especially dark tunnel, here is how:Start from the bottom up,Improving your credit score just like the way everything else begins from the bottom. You need to know how you got there so that you can get out. Consider this as a maze; you have to go back the same way you came to get out of it. When working to improve our credit rating, you have to know what you did wrong so that in future you avoid doing the same thing.
Consolidate.Debt consolidation is usually for individuals that experience difficulty paying off debts to their lending institutions. Consolidation is recommended for such people to unburden them of stress in making many different monthly payments to several different lenders.Examine and re-evaluate.Be your own financial counselor. Do not let financial problems pile up. Rather than awaiting credit rating reports to be mailed to your front door, make your own assessment. By doing this, you are updated concerning your credit reports.
Important: Having different types of credits can help your score but don't go out and get loans if you don't need them. This isn't a significant part in the credit score formula (it only represents 10% of your credit score) so don't get yourself into more debt just to have a better mix of credit.How Can I Improve My Credit Score? Now that you know what a credit score is and where it comes from, the next thing you have to do is to start improving it as soon as possible. The truth is that it won't be an easy task (especially if you have a low one): it will take some time, money and patience but it will be worth it. A few more points could be the difference between buying the home or car that you and your family deserve or not!
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