Excerpt
The following is an excerpt from the book Invest in Your Nest
by Barbara Kavovit
Published by Rodale; June 2006;$19.95US/$26.95CAN; 1-59486-151-X
Copyright © 2006 Barbara Kavovit
Debt Consolidation And Credit Know Your Credit Score
Check Credit Rating The most important part of qualifying for a mortgage isn't how much of a down payment you can make, it's how good your credit score is. The better your credit, the more easily you can secure a mortgage loan, even without a fat bank account or a high-paying job. The first and most important action you should take is to get your credit report from each of the three major credit bureaus, Experian, Equifax, and TransUnion. You have to get all three reports because the companies and utilities that extend you credit don't report to all three bureaus. The result is that each consumer has three credit reports with three different sets of information. You can access the reports for free at least once a year. If you find errors and report them (see below for details), you can get a revised report for free.
How To Improve Your Credit Score If you apply for mortgage finance, you do not know if you will get approved for the loan and what the percentage rate will be. Both of these depend on your credit score. The better you credit score is, the higher your chances of an approval at a low rate. Credit scores are based on the information in an individual's credit report. Lenders use credit scores to evaluate the potential risk posed by lending money to consumers
Improve Credit Rating Your credit score is based on the information in the credit report. In the simplest terms, the score indicates how likely you will be to pay back a loan in full and on time. According to Steven Burman, president of Credit Advocates and an expert credit counselor, it reflects your credit history, how much debt you currently carry (called outstanding debt), how much debt you're already approved to carry in the future (add up the credit limits on your credit cards for the answer), how long your credit history is, and how timely you are in paying bills. The higher the number, the better your credit is, ranging from a low of 300 to a perfect score of 850. Do everything you can to improve your score -- it's even more important than saving money, in my opinion! Why? Because the higher your score, the better the interest rate you will get. If you have a very high score, you may even be able to buy a house with no money down.
Know about credit reports, credit scores, credit ratings and other details related to credit to improve your credit ratings. We provide all these credit report services and scores to individuals who need help.
Credit Online Rating Report Improve Your Credit Rating
Steve says that you have to take personal responsibility for your credit, and I agree. The first time many people see their credit reports is when they are about to purchase a home or a car. Because it can take about 3 months (and sometimes much longer) to change a credit score, if the score is wrong or low at that time, it could be too late to fix it. You could lose that fabulous apartment! Don't let that happen -- start changing your score today. Here are six proven ways to improve your score:
Because each bureau can and does receive information from different banks and creditors, your credit score (also referred to as "FICO score") can differ from credit bureau to credit bureau. While credit scores themselves range from 350 to 850, a FICO score of 700 from Experian is generally considered the equivalent of a 700 FICO score from Equifax or TransUnion. Regardless of which bureau supplies your credit report rating, the higher your FICO score, the better your chances are of securing a loan, with a favorable interest rate and ultimately having a stronger more solid credit history.
Credit Score Rating Scale 1. Check and correct your credit history
Thirty-five percent of your score comes from your credit history, according to Steve. Unfortunately, 70 percent of credit reports contain errors -- mistakes that can adversely impact your score! Mistakes range from the misspelling of names, to reporting wrong addresses or places of employment, to confusing the accounts of people with the same name, to including outdated information. You can and should report errors to each of the credit bureaus since they do not share information. You can file disputes by phone or by mail, but you may find that it is most convenient to dispute errors online. Once the credit bureaus receive a dispute, they have 30 days to investigate. If they cannot verify the information in that time, it is deleted or corrected by default. Once you dispute information, the onus is on them to prove it. If your payment was late once or twice and the creditor reported it to the credit bureau, you can ask the retailer or credit card company to issue a letter of correction. For example, many retail stores would prefer to keep your business by issuing a correction than lose it by refusing to. Always follow up on promised corrections by rechecking your credit report. If some of the accounts on your report are old and closed, tell the credit bureau that you don't recognize them. They will investigate, find that you are not a customer, and remove them. It's best if your credit report lists only active accounts. Even when some of the accounts are closed, having dozens of them may make lenders assume that you are not a stable credit risk.
• Try not to exceed 30% of your credit card’s credit limit. Large credit balances can cause your credit score to drop. Credit scores are statistical scores based on your credit report that predict the probability of your defaulting on your credit obligation. A good credit score can be helpful to obtain more credit when you need it and at a lower interest rate.
Bad Card Credit Credit People 2. Pay down high balances
The amounts you owe on revolving credit accounts are responsible for 30 percent of your score. Steve says the fastest way to improve your credit rating is to pay down balances. After he advised one client to use all of his available cash to pay down his credit card bills, the client's credit score went up by 100 points. Keep revolving credit accounts under 30 percent of the available limit. For example, if your credit card limit is $10,000, keep the balance under $3,000. High balances adversely affect credit ratings. Plus, credit card debt is expensive to carry. Some cards charge up to 24 percent interest on unpaid balances. Are the designer jeans and fur jacket really worth that? Pay off your credit cards! You can also negotiate with your credit card company to reduce or eliminate interest charges and sometimes even reduce what you owe.
Free Credit Rating Report 3. Make history with your credit
It's good to have some activity and history on the account. "Many people think closing accounts will make their credit look better, but it depends," says Steve. "Look at the accounts you are closing and keep the oldest one. Length of credit history counts for 15 percent of your total score."
Credit Rating Scale 4. Think twice about new credit
When you open a new credit card account, the creditor makes an inquiry to one of the credit bureaus to evaluate your history. The number of recently opened accounts and credit inquiries accounts for 10 percent of your score. (Note that checking your own credit report doesn't count as an inquiry, however.) "If you start applying for loans at an auto dealership or a bank and each one does an inquiry, it's a negative," says Steve. When a store sends you a sales pitch saying you're preapproved for credit, resist the temptation to fill out the application form. One credit card is all you really need. At any rate, closing an account doesn't mean it automatically disappears from your credit report. You have to ask them to remove it. Better yet . . .
Bad Credit Rating 5. Pay with cash
Using debit cards and cash are good ways to control your debt (and therefore maintain a great credit score).
Credit Rating Agency 6. Pay all your bills on time
Late payments can have a substantial negative impact on your score. For example, you can raise your score by as much as 20 points simply by paying bills on time for 1 month!
Credit Rating Canada For more information on improving your credit rating, visit the Federal Trade Commission's credit repair page at www.ftc.gov/bcp/conline/pubs/credit/repair.htm. To dispute information in a credit report, here is how to contact the credit bureaus:
Bad Credit Mortgage Rating Equifax Information Services, LLC
Disclosure Department
PO Box 740241
Atlanta, GA 30374
800-685-1111
www.equifax.com
Good Credit Rating Experian
475 Anton Boulevard
Costa Mesa, CA 92626
or
955 American Lane
Schaumburg, IL 60173
888-397-3742
www.experian.com
Credit Score Rating Chart TransUnion LLC
PO Box 1000
Chester, PA 19022
800-888-4213
www.transunion.com
Credit Mortgage Rating Poor Annual Credit Report Request Service
PO Box 105281
Atlanta, GA 30348-5281
877-322-8228
www.annualcreditreport.com
Good Credit Rating Score Annualcreditreport.com is the official site that helps consumers obtain the free credit reports they are entitled to annually, as required by law.
Poor Credit Rating Loan Reprinted from: Invest in Your Nest: Add Style, Comfort, and Value to Your Home by Barbara Kavovit © 2006 Rodale Inc. Permission granted by Rodale, Inc., Emmaus, PA 18098. Available wherever books are sold or directly from the publisher by calling (800) 848-4735 or visit their website at www.rodalestore.com.
Bank Credit Rating Author
Barbara K is CEO of barbara k!, a comprehensive lifestyle brand that offers solutions for women through innovative home enhancement/repair and automotive products. She is also the home improvement expert for AOL Coaches and author of the inspirational fix-it handbook Room for Improvement. Barbara has been featured in the New York Times, USA Today, Real Simple, and O, The Oprah Magazine, among others, and has appeared on numerous television and radio programs, including Today and Good Morning America. She lives in New York City with her son, Zachary. For Barbara K's products, visit www.barbarak.com
Credit Card For Poor Credit
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