Get A Handle On How Your Credit Score Is Calculated
Every now and then there are seminars at various places in major cities to explain to consumers how credit works and how their credit score is calculated. It is surprising to note the typically poor turnout at such events, since most people figure they already know as much as they need to know on the topic.
The truth is that they could not be more wrong in that assumption. How your credit score is calculated changes every now and then, and what was true 5, 10 or more years ago is totally different today. The vast majority of consumers do not realize what components are used to calculate their credit score, and making payments on time for your existing credit cards is only a small part of the whole equation.
The bottom line use of a credit score is that it is a number calculated by the credit reporting agencies that is supposed to summarize the amount of credit risk or credit worthiness that an individual or business has. Lenders use the credit score number to determine whether or not to approve a loan or new line of credit, and if approved, to determine the interest rate that will be assessed.
True, one of the main criteria used to compute the score is the number of accounts that the person has open, the length of time they have been open, how often they have gone over their credit limit, and do they have a history of making on time payments.
But there are two things that most people do not realize. There are three major credit reporting agencies, and they do not share information. Some of your creditors report to one of them, others report to another one, and some big ticket items such as your mortgage lender probably report to two of them or perhaps all three. The key here is that none of them have a true complete picture of your credit history, and it is up to you to correct their misconception.
The other thing most people do not realize is that the majority of consumer credit reports contain errors. This is not done purposely or maliciously, but errors creep in since much of this is a manual process, and those errors once introduced will remain there forever until YOU get them corrected. They do not "auto correct" over time.
There are various things you can do, in addition to ensuring that the errors on your credit report are corrected or removed, that will serve to raise your credit score. For example, since one of the criteria is how close your outstanding balance is to your credit limit, you could call and request a higher credit limit, and once approved, then that same outstanding balance is a lower percentage of your limit, which gives you a higher score.
Another myth is that you get a better score by transferring all your debt onto one credit card. Not only is that untrue, that can actually hurt your score by lowering it, since then you have less credit open and the one you do have open is much closer to your limit.
There are many things you can do to improve your credit score, and you need to understand the facts about what factors are important and what are not. Do not depend on urban legend or old wives tales to make that determination, since a higher credit score can favorably impact you in many different areas of your life.
For more insights and additional information about how to Improve Your Credit Score as well as getting free copies of your credit reports, please visit our web site at http://www.credit-help-center.com
Related Articles:
How To Rebuild Bad Credit
Sometimes it seems as though if you go through a tough period in your time, at least in the eyes of the credit card companies, you are toast. It seems almost impossible to get a new credit card. The problem is multiple things, one of the biggest of which is that there are three major credit bureaus that blatantly advertise the fact that you fell behind on your payments a few years back. Your credit report from these credit bureaus holds you back from rebuilding the credit you need.
CIQ/Voisys Introduces Virtual BDC for Internet Finance Leads: Establishes Immediate Contact Between Auto Dealers and Internet Car Buyers
CIQ Inc. /Voisys, an 800 and Internet based lead generation system serving the automotive non-prime, prime and lease markets, today announced the release of a Virtual BDC as an enhancement to its Internet Finance Leads Program. The new tool guarantees immediate follow up of all Voisys Internet Finance Leads.
Online Banking Services - 4 Great Reasons to Use Them
In this modern day of technology, more and more things are becoming computerized, and your banking is no exception. While in recent years you had to go to a bank to deal with your bank account and various other related activities, now days most banks actually provide their customers with online banking services, which takes banking to a whole new level. Now you may be wondering if banking online is really such a great choice, but the following are four really great reasons that you may never want to go back to banking the way it was before you could bank online.
GTM Tech Valley Payroll and Sunmark Federal Credit Union Begin Offering Payroll Services to Commercial Members
GTM Tech Valley Payroll, one of the fastest growing private companies in the Capital Region, has signed an agreement with Sunmark Federal Credit Union to add small business payroll to their growing list of commercial member services.
HyPerformix Announces Speakers for Annual IT Performance and Capacity Summit HP, EDS, McKesson, Royal Bank of Canada and IBM-Tivoli Scheduled to Disc
HyPerformix, Inc., the leader in Predictive IT Management?, today announced that IT leaders from HP, EDS, IBM-Tivoli, McKesson, Royal Bank of Canada and other industry giants will meet at the 2007 HyPerformix Summit to share insights and experiences in managing the performance of their critical applications and on aligning IT initiatives to the needs of the business. The summit will be held Oct. 15th - 16th at the Hyatt Regency in Austin, Texas.
Save With A Gas Rebate Credit Card
It's on the news almost daily, another reason why gasoline prices are increasing further or a reporter telling you where you can find the lowest gas price in town. Rather than running all over looking for the lowest gas price, it would be easier to know you?re going to get a percentage of that purchase price back automatically. There are a number of gas rebate credit card offers available allowing discounts on your fuel purchase.
How To Get A Car Loan With Bad Credit
Recent years have made it a little easier to get a car loan - even if you have bad credit. The truth is that some lenders are actually looking to give money to people with bad credit. Typically called sub prime lenders, they can give you the loan you need to buy the car you want.
Unsecured Loans - The Great Credit Rating Myth?
The chances are that if you?re reading this, you are either already in the process of applying for a loan or have already applied for an unsecured loan but have had some difficulties in being accepted, right? You might be wondering whether these difficulties have something to do with your credit rating? You could be right, but even if you?ve never missed any repayments in the past, it still doesn?t guarantee that your credit rating will enable you to borrow the money from any lender.
Mortgage Holders Can Now Pay Monthly Mortgage Bill Online with Visa, MasterCard and Discover Credit Cards
CardIt, LLC. launches company operations to give consumers more options to pay their mortgage.
