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Posts Tagged ‘Credit History’

Why is it important to know how your credit score is calculated?

The main reason to know and understand how credit rating is calculated to help you learn what to do in order to keep your score as high as possible. If you have a low credit rating, understanding how it’s calculated can help you determine what problems you should correct in order to improve it. Understanding how your score is calculated also helps with your financial planning by allowing you to take in account the effects of any given action on your credit rating.

FICO

In the United States, FICO is the leader of the credit-rating industry and each of the “Big Three” credit reporting agencies – Equifax, Experian, and TransUnion – use various FICO-developed systems to calculate credit scores. The exact formula used by each of the Big Thee is a closely guarded proprietary secret; however, FICO has provided the public with a basic outline of what factors are taken into consideration and what importance they have in the calculation.

Payment history

The most important factor in calculating your credit score is your payment history. This is the record of your payments to creditors.   Your payment history shows whether or not payments were timely. Defaulting, missing payments, and late payments are all part of your credit and payment history. This part generally accounts for 35% of your credit score, meaning that a bad payment history is one of the worst hurdles to a good credit score. Most notations on credit history stay on your report for seven years, regardless of if the debt has been settled or paid.

Credit usage ratio

Your credit usage ratio is a comparison of the amount of credit you have immediately available to the amount of credit you have actually used. The more unused credit you have available, the higher the score. This is a somewhat tricky metric because it only takes into account your open credit accounts, so sometimes paying off an account and closing it can hurt this part of your score. Having a lot of open credit accounts, but keeping them paid down, will boost this portion of your score. Your credit usage ratio is usually weighted at about 30% of your score.

Length of credit history

The third factor, the length of your credit history, counts for about 15% of your credit score. The purpose of a credit score is to give lenders a clear view of your debt-paying habits, so the longer your credit history, the more information there is for lenders to consider. This is a factor that the consumer can’t really affect in a meaningful way, but it suggests that it is to your benefit to start establishing credit as soon as people. The less history there is, the less value your credit score has to potential lenders.

Types of credit used

The various types of credit a persons uses are also taken into consideration, with diversity of credit being viewed favorably. If you only have one type of loan, like a revolving credit card account, this portion of your score will be lower. Having several different types of debt – credit card debt, non-revolving bank loans, a mortgage, a car loan, and so on – will increase this part of the score because it indicates to lenders that you understand how to manage different types of loans. The types of credit you have used constitute about 10% of your score.

Recent credit inquiries

Although credit scores are used for other purposes than applying for new loans, the FICO system generally assumes that recent credit checks mean you are actively applying for credit.If there are several recent inquiries, it’s assumed that you’ve been trying to borrow from several lenders, which is viewed negatively. The more recent inquiries you have, the lower this part of your score. This factor is weighted as about 10% of your credit score.

How is this information helpful?

By understanding how your credit score is calculated, you can make more prudent financial decisions that can help improve your score. For example, since your credit usage ratio is so important, when you pay off a credit card account, it may be a good idea to keep the account open and not use it, rather than close it.  Likewise, when you’re presented with the choice of applying for an additional loan to keep other obligations current, or missing payments on an existing loan, understanding how the score is calculated can help you make a better decision about the right course to take.

If your credit history shows that you have financial problems then you might find it difficult to qualify for a payday loan. There are many companies that can help you even if you have bad bad credit.

There are certain requirements you must meet in order to qualify for a pay day loan and these requirements have nothing to do with your credit. The cost associated with unsecured loans for people with bad credit are a little higher than for others.

If you have bad credit then you will have difficulty finding any bank that will help you when you are financially in trouble, especially if you don’t have a guarantee for the bank to use against you on the loan.

Bad credit can happen to all of us. Many people struggle with bad credit because exceptional financial needs. Most people live paycheck to paycheck and if an emergency comes up in your life and puts you in a position that you need a few hundred dollars, you can be in really big trouble.

You can sometimes get a loan against your next paycheck even if you have bad credit. Some of these companies have different pay back options also.

There are a few requirements you must meet in order to have an unsecured bad credit cash advance.

• You should not have filed for bankruptcy within the last year or have filed multiple times.
• You must currently hold a job since at least 5 months. If you are unemployed then most unsecured lenders will make you wait a while.
• You also must have a current bank account that you have had for some time.
• You must be able to provide bank statements that show you do not write bad checks, that you are not in the negative, and that you do not have many overdraft fees.

  The company also wants to be able to verify that your bank account information is valid. Your monthly income must be above $1000.

• You must also provide references and contact information that is valid.

The companies will contact your references and they will verify your home phone number and address. In addition, if you get paid monthly then many lenders will not consider giving you a loan because they want a fourteen day turn around on their payment.

There are many companies you can choose from to get an unsecured loan from if you find yourself in a bind and need some quick help. Most of these requirements are true for every companie who provides unsecured loans.

You can apply for an unsecured loan through companies on the Internet or you can go to a location in your area to apply. If you apply for an unsecured loan over the Internet then it may take the company up to 48 hours to make a decision on the loan. This depends on the difficulty in verifying all of the information provided. If you walk into an office with all of the required documentation then the company may be able to give you a loan within a couple of hours.

When you are requesting a pay day loan for the first time then you will only get a small amount at first. The loans you may qualify for range from $100 to $300. Once you establish a reputation with the lender for a period of time and prove to be good for the money on your next payday then you can borrow up to $1000.

The way the unsecured loans usually work for a borrower is that they must provide a bank account that is valid. Many lenders need you to have a paycheck that is direct deposited into your bank account. Now they can send the request to be paid right out of your bank account on your next payday. The lenders prefer not to lend money for more than 14 days.

Unsecured lenders for people with bad credit are often more expensive than lenders for people who have good credit. Good credit can give you a lower interest rate. This means when you get a loan you have to pay less back to the company.

When you have bad credit then any lender that is willing to give you money will give you very high interest rates. This is true for any lender. The rates for payday loans for people with bad credit are usually around 25%. They want the money paid back in full with the charges. The fees for payday loans might be something like $25 for every $100 you borrow from them.

Some bad credit lenders allow different payback options for your loans. If you need to make payments to pay off the loan you need because you cannot afford to pay it all back out of the same paycheck, this can be an option for you. When you shop around with some of the different lenders you might have to pay a higher fee but there are lenders out there that will allow you to make payments.

If you have poor credit and need money fast there are people out there that can help you with your situation. Not all hope is lost when you have bad credit. There are plenty of companies that can help you if you meet the job and bank account requirements. Be sure your references will verify you are good for the money and be sure your bank account shows you are in good standing.

There are only a few simple requirements for a guaranteed bad credit payday loan. The lenders don’t care about your credit. They try to help people like you get out of a difficult situation while trying to make some money for themselves :-)

Many individuals are looking for a credit repair method to decrease the debt load that they are carrying, especially when the person is battling a bad credit repair report as well.  When looking for repair methods, there are several things that the person must keep in mind in order to get the best price and the quickest approval for the method that they desire.Verification of the individual’s credit history, payment history and the amount of debt on him is done before applying the procedure.  When using these factors to determine whether the person should be using a credit repair method, a bad credit repair report can result in the person receiving a much higher price for bad credit repair help or being rejected by the company outright. 

Review Your Options When You Have Bad Credit Repair Report

When looking with a company for a credit repair method, there are several things to keep in mind.The important thing is to avoid the first methods that the person may find which cannot be the best one according to his situation.  In many cases, a person that has a bad credit repair report is so desperate for a solution that they will use the first method that they see regardless of the terms and choose whatever method that looks like it may work.  It is best to review several different methods to find out which ones will offer the best results. 

Be Wary Of Deals

It is always great to find repair methods with prices and little effort involved, but the person must be careful to make sure that the low price is not just a hook to get the person to accept the method.  In some cases, the price will change after a brief introductory period, after which the price will rise dramatically higher for the services to continue.  This higher price put the person deeper into debt by a significant amount and may even make the method unaffordable for someone that has a bad credit repair report or financial situation, making the situation worse. 

When dealing with companies that offer credit repair methods, it is best to be sure that the person is dealing with a company that is reputable.  There are many scam artists and shady lenders out there just waiting for the unwary, which includes many people with a bad credit repair report.A number of companies providing repair methods include the heavy fees into the price of the program.  These fees can total hundreds of dollars and is solely for the privilege of using the methods offered by the company.  Individuals that submit their information to these companies can find themselves even deeper in debt because of the numerous fees that have been charged before the individual ever receives any assistance with their problem.  Be sure to read the terms and conditions for the company carefully before giving them any personal or financial information about you to avoid becoming the victim of a scam or unscrupulous business practices.

Maybe you are beginning to question whether or not your credit card history makes a difference. A question like that can only be answered in the affirmative. Credit can seem to be an insignificant at times and certainly not something to be concerned about, but it is plays a serious role in finances.

Before you can make any large purchase, including a car or a home, your financial history will be taken into consideration.

All credit institutions from banks to credit unions and other lending companies will examine the credit history of loan applicants making sure their credit report are virtually spotless. Of course, you now may be curious what any of this has to do with your credit card.

Believe it or not, your credit cards can impact your credit history. For instance, if you skip payments, carry a balance, or owe money to any card, then you can expect a negative credit report.

Your credit card history report is a document that details all items, good or bad, that influence the development of your credit. Items that may appear in such a report include personal loans, car loans, home mortgages, and anything else that you might owe to a creditor. This means that it is important to have a positive financial history and you have to follow a few guidelines to help you accomplish this task.

Try to pay the balance in full every month, and make every effort to avoid making minimum payments. Do not increase the amount you have borrowed, even if your credit limited has been raised. If more is added to your card’s balance, any monthly payment amounts will go toward the interest and the principal will remain nearly the same. You will forced to pay on this larger balance for that much longer .

Even when it has not been used, the money you have borrowed is considered something you owe. You may be curious about why good credit is important, but the answer to that question is really rather simple. Banks and other lending groups do not want to give money to those that will not pay them back. Lenders want to loan money to just those who will be sure to pay it back.

Many lenders hold to the idea that people with poor credit simply do not have the means to repay a loan. A person’s credit worthiness is based on their credit history throughout their life. A credit card history could very well be a pivotal factor that affects one’s entire financial history. How you repay a small unsecured loan may be a good evidence as to how the rest of you bills are paid.

Your credit card history has to be monitored and you have to keep those bill paid on time so you aren’t socked with a wad of debt.

Your credit report and credit rating will be decided by all such elements. It doesn’t matter if you are nice guy or not; it won’t help you get a loan if you have a bad rating.

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Everyone becomes concerned about their credit report and credit score at some time in their lives. It may be when a loan is needed to buy a home or a new car. Yet your credit report can become an issue at other times, as well, such as when you’re trying to rent an apartment or obtain a new job.

You may have some idea what your credit report is, but many people don’t realize the depth of information these reports contain? Most people who’ve never seen their own credit report are amazed at the amount of information it contains. Your social security number, birth date, present and former addresses, amount of money you earn and even your place of employment are all part of your credit history. If you’ve ever been arrested, sued or filed for bankruptcy, that information will also be included. Information about whether or not you’ve paid off debts and paid your bills on time is also included in credit reports.

Credit reports are generated by credit bureaus, and they receive the information they contain from businesses and other consumer reporting agencies. Experian, Equifax and Trans Union are the three major credit bureaus that collect information and compile it into your credit report. They then sell your credit report to businesses, employers, landlords or creditors upon request. Everyone has access to their own credit report, including the sources of information it contains.

Today, people are more aware of the importance of checking their credit reports regularly due to identity theft. The “credit crunch” has also sparked new interest in consumers regarding their credit histories, as it has become more challenging to obtain loans, credit cards and other types of credit. Reviewing your credit report regularly instead of waiting until you need a good credit score is a smart strategy. Checking up on your credit yearly can help you prevent being denied insurance coverage, employment, the loan you need and even your next apartment rental.

Even those who are confident their credit is excellent are advised to check their credit scores at least once a year. This is because it’s a very simple matter for credit bureaus to obtain erroneous information. You have no way of knowing what’s in your report until you look at it.

You can take steps to clear off old or incorrect information, but it takes time. This is why monitoring your credit history is a better approach than waiting until you’re in need of the great credit score you believe you have. It takes some time and effort to monitor and improve your credit history, but it’s essential if you want to obtain favorable loans, credit approvals or enjoy a host of other benefits associated with a great credit score.

Your credit report information can signify the difference between a “yes” and a “no” on your next big purchase or on your next charge card.  This can be a big problem if you are planning an event such as a wedding.  You attempt to acquire credit for that purchase of wholesale wedding favors and are summarily turned down!  It’s terrible.  We basically understand what facts are listed on the tell-all expose of our debt narration.   The basic info includes name, address, telephone number, social security number and your date of birth.

Basic information aside, there is more to your credit report information to contemplate. Many may not be aware of the fact that alias names are also included on the sheet. Your former address or addresses are additionally included as are old phone numbers. If you have an unlisted phone number, it is still included with the rest of your credit report info. Many are stunned to discover that unlisted telephone numbers can be shown in this record, but it is.  It’s important to know what’s included and be able to organize it, because we all know that a bad credit report can set off more problems than yeast infection symptoms.

Another surprise that pops up is your employment history. This might not seem pertinent or even fair but we have to take into account the individual’s ability to make on-time payments. In order to do so the employment record must be listed in the credit report information because the agency lending the money or the business giving the line of credit needs to ascertain if the potential debtor has a lasting source of pay.  In addition, if you work for yourself – for example, if you have just earned your personal trainer certification – that could be an issue.

Some people are disappointed to see that they their applications are denied purely because they have recently begun a new job. A person with little history included on his credit report information may not get a loan or a line of credit if he has merely been working for a business for a few weeks or months. The individual has demonstrated no constancy and there is little else the lender has to go by with the exception of payment record. If this is a first-time applicant, he might find himself out of luck.

There are some items that are left out of your credit report info. Your age, race and marital status are off limits to a prospective employer who is conducting a search on you. These items are not applicable to employ so these are kept privileged.

Bankruptcies that are more than ten years previous are excluded as well as debts that are more than seven years old. This is the general rule, but it is a decent idea to look into your record regardless. Various old debts may still turn up and bankruptcies may not vanish in a timely manner. It is always a good idea to verify your credit report information for accurateness.

You have a very busy life. There are so many things you need to keep track of. Picking up your kids from school, going grocery shopping, paying your bills on time, getting enough exercise, are just a few examples of the complexities of life. How then are you supposed to do all that AND stay up-to-date with every aspect of your finances?

MyFico Score Watch helps you do just that by giving you one central and automated place to keep track of you FICO scores and your credit reports.
Score Watch Benefits:

• Score Watch automatically keeps track of your credit report on a daily basis and your FICO score weekly.
• Has the ability to alert you via email or even SMS when there is an unexpected change to your credit that would negatively affect your FICO score.
• You can set a target score you want to reach and MyFICO Score Watch will alert you when you’ve reached it. It will also alert you when you qualify for better interest rates
• Your membership with MyFico Score Watch® entitles you to two credit reports from Equifax yearly that you can review and save for future reference or to dispute incorrect data.

Why is it so important to keep track of your FICO Score?

Your FICO Score is how money lending agency like mortgage bankers and credit card companies rate you. Your FICO score is made up of a lot of different statistics and the score plays a major part on the interest rates you can qualify for. If your score raises you should be entitles to a better rate and if your score drops you many get penalized.

How is your FICO Score Calculated?

There are many different things your FICO score is made up of and that My Fico Score Watch® monitors but a few of the most influential ones are:

• Payment history for any previous debt
• Amounts owed on current loans and credit cards
• Length of credit history
• New credit received
• Types of Credit Used

With all these factors it’s clear that you need help keeping up with all this information. Wouldn’t it be nice if you could just put all this reporting and tracking on autopilot? Well now you can with MyFico Score Watch®!

by Trent Goldenblum