Normally, credit reporting agencies, which are private companies, sell your credit scores and reports to lenders who request copies in the event that you apply for a loan. The first thing that lenders will check when you apply for credit whether a loan, mortgage, or a credit card is your credit score. That’s because before they decide to lend you money, they want to know what type of risk you will be.
Credit score scales are calculated through a complex mathematical algorithm using factors generally involved in making credit decisions. These factors include payment history, credit history, credit available, existing or current debts, bankruptcies if any, among others.
The most widely applied credit score calculator by United States three major reporting agencies, Equifax, TransUnion and Experian, is the one developed by the Fair Isaac Corporation called FICO. Fico is considered very significant because it is among the factors to acquire appraisal in the United States.
Since each of the different credit bureaus use different evaluation systems for their credit score ratings, each based on different factors, it is highly likely that your credit score issued by one bureau is different from those issued by the other two. The cost savings of a non-FICO score are tempting to some banks and credit card companies, who need an accurate risk assessment on millions of accounts every year.
Lenders using your credit score, now base their decisions on facts, not on personal feelings or factors like gender, race, religion, nationality, and marital status, thus reducing discrimination in credit approval processes. Lenders are still allowed to check your score when you apply for a loan or a mortgage with them, but now, you can also see your own score.
If you make your request directly with the credit bureaus, there may be a small fee involved. Checking your credit score regularly will avoid any complications but don't check more than once a year. When you want to purchase a car or acquire a land through mortgage, it is wise to know your credit score. When you request your free credit report and score, you will need to provide the following information: Name, Address, Social Security Number (usually just the last four digits), and Date of birth. The information will be used to verify your identity and to protect your free credit report and score from would-be identity thieves and con artists.
Once you get your free credit report sit down and figure out what areas need improvement. Having a long credit history will positively impact your credit scores while short credit history usually means you are a risky borrower. Moving the balance to other accounts and closing a previous one can just hurt the points you have. The easiest way to increase credit scores is to pay your bills regularly and always on time. If you open a lot of new accounts in a very short time, this could actually lower your score down and make you appear like a risky borrower. People have been wanting things to be quick but you can't rush a good credit score. Take the time to make the credit score high.
Knowing how to get your credit score and improve your credit score will help you succeed in today’s world. If you want to succeed financially in today's society it is almost imperative that you know how use credit wisely.
Jim Banks helps consumers understand their credit reports through education and by resources to help eliminate credit difficulties. For more information on where to get your credit report and how to improve your credit score visit: http://creditcardmonitor.org/creditreports.php
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