Credit Score Questions

Credit Score Questions

What Goes Into A Credit Score?
A credit score is a single number used by creditors and sometimes even potential employers to assess your worthiness.

Why should we care what our credit score is?
Because having a good credit score can save you thousands in interest payments. Credit scores are the most important thing used in determining whether you will be eligible for a loan and how much you will pay.

Low Credit Scores Typically Equal High Interest Rates:
If you owe $25,000 on credit card debt at 28% interest rate and were to pay that $25,000 principle off in 5 years a that 28% interest rate, you pay back a total of $46,7037.60. Of that almost $50,000, you paid back $21,7037.60 just in interest!

Know Your Credit Score:
FICO (Fair Isaac Corporation) is the credit score lenders use most. The score can range from 300 up to 850. With the economy currently in flux, many lenders are increasing what they consider to be a “good score” to somewhere around at least a 720 score. If you score is below a 700, you may have a reason to be concerned.
The first step to changing a credit score is determining where you are now. You can access scores at www.myFico.com, and www.Equifax.com. Similar scores can be obtained from two other credit bureaus, www.TrausUnion.com, and www.Experian.com. Consumers are now permitted one free report annually from www.AnnnualCreditReport.com

How to Increase Credit Score Points Fast:
The Bottom Line: There is no “one-size-fits-all” quick credit solutions, but by following this advice, it is possible to noticeably increase your score in a matter of months.

1. Pay down credit card balances;
2. Pay your bills on time;
3. Wait on tossing all those old credit cards since 15% of your score is based on the length of your credit card history. Even such cards are rarely used, a long credit histor shows loyalty and stability-both of which can work in your favor.
4. Talk to your lender to try and remove information that is inaccurate or unusual from your credit report;
5. Notify the credit bureau of mistakes on your report. The bureau has 30 days to complete such an investigation. The good news is that if the creditor does not respond to the inquiry or cannot confirm the information, it is removed.

After Bankruptcy:
Your ability to rebuild credit after filing bankruptcy is better than ever. After you get your discharge, you will receive many solicitations from lenders offering to refinance homes, vehicles and credit cards, Here are some tips to expedite the process to increase your score.

1. The old advice of paying bills on time is still just as important;
2. Don’t live like a millionaire unless you are actually a millionaire. Generally, your consumer debt should be equal to no more than 20% of your disposable income after housing and vehicle costs;
3. Open a checking or savings account which may demonstrate you can responsibly manage your money.
4. Obtain a secured card where you can deposit funds and charge against it. When you pay advances back over two months, they will be reflected as positive marks on your credit report;
5. Notify the credit bureau of mistakes on your report. The bureau has 30 days to complete such an investigation. The good news is that if the creditor does not respond to the inquiry or cannot confirm the information, it is removed;
6. Become an authorized user on an account with someone who has a good credit score and pays on time;
7. Buy used vehicles to avoid taking a majority of the depreciation;
8. Avoid high interest loans (i.e. payday or cash advance type loans.)
The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney regarding your individual situation.