Article by James Galloway

Credit score could be a dire stuff to talk about, especially if you are a “cold cash patriot” for quite some time now. Why talk about credit score, if you can afford to purchase a real estate property using thick bundles of 100 dollar bills. It is just a waste of time, and you would not be interested in dealing with credit scores or its attributes.

That is, if you have plenty of cold cash to spend. But what if time comes that you do not have even a single dime at all? Do you think a credit score is still a dire stuff to talk about? Think again: may be this is the right time that we talk about credit score not just by an “inch below the water” but by “at least six feet underground”.

Keep in mind that your credit score could be your “best of friend” or the “worst of your enemies”. The higher your credit score is the higher chance you have to qualify for loans and credit cards with lower interest rates and easier terms of payments. The lower the interest rate, the more savings you can generate in the long run.

And that is a good thing.

On the other hand, lower credit score will give you headaches, making it difficult for you to secure a loan or credit card, not to mention the higher interest rate applied in case you will be able to qualify for a loan or credit card. Thus, possessing lower credit score will really make your head ache and will make you dig in your pockets beyond the limits.

At this point, you should consider improving your lower credit score. There are several options that you can take, yet you are just three steps away from improving your credit score. How will you do it? Take a look on the following and make sure you will be able to follow them.

1. Inspect your credit reports for any inaccurate entries. Keep in mind that errors in credit reports are very common, thus it is recommended that you examine your credit reports at least twice a year. In this way, you will be able to pinpoint any mistakes and fix the problem before it can do serious damage to your credit performance. You can obtain your credit reports from the three major credit reporting agencies in the United States.

2. Always pay financial obligations on time. Do not underestimate the value of making payments on time. Keep in mind that one of the major factors that can affect your credit score is your habit in paying your financial obligations. If possible, pay your bills ahead of the scheduled due date. If you have problems in making payments on time, you may also consider automatic mode of payments.

3. Use credits on a minimum basis. If you are using credit cards, avoid making purchases beyond your credit limit and attempt to keep your balances at bay-let us say, around 25 percent below your credit limit. It will help you avoid accumulating huge debts that may come from unwanted purchases using credits.

Credit score is very vital, especially if you have plans of securing loans in the future. Thus, if you have a lower credit score, do not waste time and follow the aforementioned three steps to improve it. Make your credit score as an asset and not as a liability.

Like this article? Improving your Credit Score is Just Three Steps Away

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Question by Jeff T: Exactly when did people’s goals change from “How do I become rich” to “How do I get a good credit score”?

Best answer:

Answer by Mike
Right after they attended those get rich quick seminars and put those concepts into practice.

Give your answer to this question below!

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Question by ant m: What’s with all those “know your credit score” ads?
I mean, how can that information be useful to you since a good score only means you can borrow money

Best answer:

Answer by Steve D
Actually, credit scores are also used to set your car insurance rates and in some cases can be a deciding factor in whether you get a job or not or rent an apartment. Too many decisions today that affect all factors of life are dependent on your credit score and it becomes imperative that people know how to use credit wisely. Knowing your score is one step in using credit wisely.

Know better? Leave your own answer in the comments!

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Article by Joe Hayden, Realtor

Let’s take a brief look at credit scores, credit reports, and how these items affect your home buying power, plus your long-term financial strength. Three companies provide this information to potential lenders, and others who deem this information necessary; Experian, TransUnion, and Equifax. Also, it is a federal law that you be provided a copy of your credit report from these three companies once a year. Go to AnnualCreditReport.com to view your reports.

First, your credit report is a compilation of your credit history related to things like credit cards, revolving charge accounts (gas card or Sears card), previous mortgages, student loans, car payments, etc. It contains detailed information on your payment history, whether or not you have any negative items affecting your credit, plus details of your personal information known by the credit reporting company. It is very important you immediately dispute any negative reports in these credit reports if they are incorrect, or take whatever steps necessary to correct the negatives if they are correct.

Several items on your credit report will affect your credit score, the number that is supposed to represent to the lender the risk they will take on by loaning you money. The factors are, in no particular order, the length of your credit history (the longer they have data for you, the better), the length of time you have had your accounts open (again, the more time, the better), the type of accounts you have (variety is good), your payment history with your accounts (on time, never late is your goal), and the ratio of your debt to your credit limit (Even if you have a credit card with a 0 max limit, if you carry a 0 balance, you are considered 100% financed, and this is viewed as a negative.).

How can you improve your credit scores by viewing the information on your credit report? Most credit reports will have a summary page that tells if there any negative items on your credit report. It is very important you do whatever necessary to remove these items from your credit report. Let me give you an example…

Back in the days before free credit reports existed, I had an outstanding medical bill that went to an old address and was never forwarded that I did not know about until I made an attempt to make a purchase that required my credit to be pulled. This negative showed up because the bill had gone to collections. All I had to do was call the doctor’s office, explain what had happened, pay the bill plus a small penalty, and they immediately reported the matter resolved to the credit reporting companies. I also followed up with the credit reporting companies and it took a few weeks of time for everything to stabilize, but the action disappeared from my credit report and I was able to again get prime rates. It won’t always be this easy, but you have to do everything in your power to resolve all negatives if you want credit and the best rates.

Another way to improve your scores is to get your debt ratios below 50% on your credit cards and revolving charge accounts. As I stated before, just because your balance is low in terms of dollars it doesn’t mean that is a positive if your debt ratios are above 50%. Use your credit report to compare account balances and credit limits and devise a plan to get your balances under the 50% (25% is even better) debt-to-credit-limit ratio as soon as possible. This will definitely improve your credit score.

Two more ways to improve your scores are to pay all of your bills on time, and not to have too many people pull your credit at any one time. There is some debate as to how much your credit score is affected by numerous pulls, and it seems to be less of a problem if all of the pulls are for the same thing, but your score will go down with every credit pull no matter what it is for. Don’t go buy a car on credit, then the next week buy a TV on credit, then a house…Space your purchases out reasonably and monitor your credit scores to see when they recover from each purchase.

Speaking of monitoring your scores, for a small one-time or monthly fee any one of the credit reporting companies will give you your credit score. It can be worth it to monitor your score as you prepare to buy a home to see what changes are improving your score and to have an objective goal to work towards to get the best possible rates and terms.

I hope this post has provided you with some helpful guidance to first gather your credit report, correct any negatives, and then improve your score. If you think of the thousands upon thousands of dollars in interest this work could potentially save you, I think it is well worth the effort…

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Question by Brett U: Can I (In today’s market and economy) obtain an FHA loan with a “Fair Credit Score”?
I have, what is considered by FICO is “Fair” (meaning between 530-603) and I was wanting to know if there are still opportunities for an FHA home loan?.
Thank you everyone for answering, I really appreciate it.
Sorry for the niksquote on the FICO score, must have been reading the wrong line.

Best answer:

Answer by ironoxidehydrate
According to FICO fair is 620-679. And you need at least a 620 to get approved for an FHA loan, even with less favorable terms.

Give your answer to this question below!

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Question by Questionaire: How does one’s “credit score” work?
I’m only barley in highschool and whenever I ask my mom she doesn’t explain it very easily so can someone specifically and easily explain how your credit works?

Best answer:

Answer by pathfinder
Credit score numbers are misleading and arbitrary. For example, one credit bureau may rate you at 575, while another rates you at 650.

Give your answer to this question below!

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If what you hated about school was being graded at every turn for how well you did or didn’t do, the prospect of receiving your free credit reports (and credit score for between 7 and 15 dollars) must feel like class quiz all over again. And like with school grades, if you have unsatisfactory results, you’ll be thinking long and hard about how to improve credit scores you get. Let’s go for the basics – a credit score is a grading system; it’s a number that anyone who deals with you financially can use to see how dependable you are with money. No matter what you apply for – a mortgage, a credit card, a car loan – everyone uses your credit score to see how reliable a bet you make. Employers trying to hire you will try to look at your credit report and credit score to use as an indicator of your character. You may get a loan even with an unsatisfactory credit score; it’ll just mean that you pay a much higher interest rate on your loan.

The most accepted way of calculating your credit score from all the details that appear your credit report is to use the FICO algorithm. With this kind of credit scoring, they rate you from a bottom score of 300, to top score of 850.

Tracking your credit score isn’t as easy as it should be. While the law says that you can always get your credit report for free once a year from each one of the three main credit bureaus, getting a credit score calculated out of them costs a few dollars ( for the FICO scores at Equifax and Trans Union, and about for the one Experian calculates). Now when you get your credit report, the first thing to do is to pore over every detail to make sure that there’s nothing amiss. In a day and age when criminally negligent debt collection agencies can very easily go and place false infoormation on your credit report, you need to constantly make sure that your credit report is all clear. This is the first and the most important thing you can do to improve credit score numbers that the bureaus arrive at.

Now making the grade with a great credit score isn’t as much about how much money you have as it is about how you take care of your finances, however little or much you make. You may not be able to control how much money you make, but you can certainly control how you spend it. To begin with, you need to make sure that your bills are paid on time all the time. This is about the most important thing you do that can affect your FICO score – it affects more than one third of it. You get points each time you pay in time. Try the credit score simulator on MyFICO.com. Missing even one bill one time can slash your credit score by 100 points. The unfortunate thing about trying to improve credit score numbers is that you need to have a good deal of credit history to make a really high number. They need to see a 5 year history to be able to judge how reliable you are. If you can’t remember to pay all your bills at the right time, you can use an online budgeting tool like Mint or Quicken to set it up for you, or you can sign up for e-mail and text message reminders with all the services you pay for.

You also need to make sure that the credit you have available to you isn’t all used up. For instance, if you have a ,000 spending limit on your credit card, and your outstanding is constantly hovering around 00, that’s kind of a bad sign. The way you utilize the credit available to you is a big sign to them of how stable your finances are. If you keep it reasonable, never going beyond 9% of what your credit limit is (but not keeping yourself from using your credit at all), that can help you improve credit score ratings by 50 points. If you happen to have credit cards that are unreasonably expensive to own, if you wish to get rid of them, you really shouldn’t. It could hurt your credit score. With one less line of credit open to you, you’ll suddenly have your credit utilization ratio jump up frome it used to be.

Amid all the advice you might hear about how best to improve credit score ratings, these two need pride of place. Take these into account, and you should be set.

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Question by ANEV: What is the lowest a credit score “one”can have?
I was just very curious about this as I have heard many different things. I was once told that your score can be as low as 400, and I also heard it can only be as low as 501. So does anybody know which is it?? Thanks

Best answer:

Answer by A W
The lowest is to have no credit score at all.

Numberwise, the lowest is 300.

What do you think? Answer below!

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Article by Consumer reports

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Question by Steven D: Why is “credit score” suddenly something so very important?
In the last year or so, ads touting the vital importance of your “credit score” sprouted all over the TV. Why is this thing so important now, but not before?

Best answer:

Answer by iceman
It has always been important. But the increased advertising you are seeing is just a way for these online sights like freecreditreport.com to simply make more money. One thing that you can say is that online fraud and indetity theft has gotten worse, so in that sense looking at your credit report/score can be vital.

Give your answer to this question below!

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