Dec
16
If you’re focused on getting out of debt, worrying about improving
your credit history is the last thing on your mind. Right now, you
just want some debt relief. And that’s completely understandable.
However, building a better credit history really should be one of your
main goals while you work on getting out of debt.
You need good credit for a number of debt related issues, such as
getting loans and credit with attractive payment terms, whether it’s
high limit credit cards with a low interest rate, or a low interest
rate for your car or mortgage, both of which can save you thousands
of dollars over the life of your loan, as well as lower monthly payments.
So how do you go about improving your credit history? In the simplest
terms, you get small amounts of new credit and repay the debt on time.
A good example of this is to get a new Visa or MasterCard and use it
for buying all the goods and services you buy anyway, and paying off
the monthly bill on time. You do NOT use the credit card for things
you do not need or do not already have the cash for. When buying with
the credit card, you need to take that cash and put is aside so that
you are sure to have it when your credit card bill arrives.
Another option, if you can do it, is to borrow a small amount of money
from your bank and then pay off the loan according to the bank’s loan
terms.
Both of these options will add recent and positive credit information to
your credit history. When it comes to your debt and credit history, the
most recent information is considered a more accurate portrait of whether
or not you are likely to pay back a debt on time. So, while new postive
information about your debt repayments will have more weight near the top
of your credit history, this also reduces the impact of your negative
credit history, by pushing it down the list.
As you move forward, these techniques will help to improve your overall
credit history and credit score.
One reason your credit history is so important is that if you let it get
too bad, you won’t even be able to qualify for a credit card at all, let
alone one with a low interest rate. You’ll also have trouble borrowing
money from a bank for any reason, whether it be for a new car, a mortgage,
a small business loan or just a small personal loan.
Other problems that may arise from a poor credit history is that it could
complicate a job search. More and more employers check your credit history
and use it to help determine your viability and attractiveness for hiring.
You may not be able to qualify for a lease from any landlord, you may not
be able to take any position that involves getting security clearance,
and life insurance companies will charge you higher premiums.
As a parting piece of advice, please avoid companies that promise to give you
a new credit history. That’s credit fraud and will hurt you in the long run,
not help you with your debt relief.
By: Freddie Johnson
your credit history is the last thing on your mind. Right now, you
just want some debt relief. And that’s completely understandable.
However, building a better credit history really should be one of your
main goals while you work on getting out of debt.
You need good credit for a number of debt related issues, such as
getting loans and credit with attractive payment terms, whether it’s
high limit credit cards with a low interest rate, or a low interest
rate for your car or mortgage, both of which can save you thousands
of dollars over the life of your loan, as well as lower monthly payments.
So how do you go about improving your credit history? In the simplest
terms, you get small amounts of new credit and repay the debt on time.
A good example of this is to get a new Visa or MasterCard and use it
for buying all the goods and services you buy anyway, and paying off
the monthly bill on time. You do NOT use the credit card for things
you do not need or do not already have the cash for. When buying with
the credit card, you need to take that cash and put is aside so that
you are sure to have it when your credit card bill arrives.
Another option, if you can do it, is to borrow a small amount of money
from your bank and then pay off the loan according to the bank’s loan
terms.
Both of these options will add recent and positive credit information to
your credit history. When it comes to your debt and credit history, the
most recent information is considered a more accurate portrait of whether
or not you are likely to pay back a debt on time. So, while new postive
information about your debt repayments will have more weight near the top
of your credit history, this also reduces the impact of your negative
credit history, by pushing it down the list.
As you move forward, these techniques will help to improve your overall
credit history and credit score.
One reason your credit history is so important is that if you let it get
too bad, you won’t even be able to qualify for a credit card at all, let
alone one with a low interest rate. You’ll also have trouble borrowing
money from a bank for any reason, whether it be for a new car, a mortgage,
a small business loan or just a small personal loan.
Other problems that may arise from a poor credit history is that it could
complicate a job search. More and more employers check your credit history
and use it to help determine your viability and attractiveness for hiring.
You may not be able to qualify for a lease from any landlord, you may not
be able to take any position that involves getting security clearance,
and life insurance companies will charge you higher premiums.
As a parting piece of advice, please avoid companies that promise to give you
a new credit history. That’s credit fraud and will hurt you in the long run,
not help you with your debt relief.
By: Freddie Johnson
Dec
13
Occasionally, having no credit history can be as bad as having a poor credit history. Before granting credit, lenders need to gauge an applicant’s creditworthiness. If you have no previous creditors, a prospective lender may consider you a high risk and either deny a credit application or offer a high interest rate. This applies to credit cards and automobile loans. Fortunately, there are many options available to those seeking funds with no credit history loans.
Every lender in approving loans surely likes to see if the borrower has sufficient capacity to repay the loan in timely manner. If the borrower earns well, has regular bank balance, has been an employee for some years and has a convincing loan repayment plan in place, then the lenders do not usually hesitate much to provide no credit history loans.
So ensure that you have adequate repaying capacity before applying for a no credit history loans. Also, you should first check your credit report for any errors. If your credit score is too low then you would be charged a very high rate of interest. So it is advisable to first pay off some easy debts to improved credit score and then you should apply for loan at better rates.
If you have no credit history still the loan market place is full of lenders who are ever willing to offer you a fresh loan. But you should be meeting some conditions laid down by the lenders. Loans for no credit history people are in fact easier to get then they were ever before, thanks mainly to cut-throat competition amongst the lenders.
By: Mathew C Kenny
Every lender in approving loans surely likes to see if the borrower has sufficient capacity to repay the loan in timely manner. If the borrower earns well, has regular bank balance, has been an employee for some years and has a convincing loan repayment plan in place, then the lenders do not usually hesitate much to provide no credit history loans.
So ensure that you have adequate repaying capacity before applying for a no credit history loans. Also, you should first check your credit report for any errors. If your credit score is too low then you would be charged a very high rate of interest. So it is advisable to first pay off some easy debts to improved credit score and then you should apply for loan at better rates.
If you have no credit history still the loan market place is full of lenders who are ever willing to offer you a fresh loan. But you should be meeting some conditions laid down by the lenders. Loans for no credit history people are in fact easier to get then they were ever before, thanks mainly to cut-throat competition amongst the lenders.
By: Mathew C Kenny
Dec
4
Why Your Payment History Carries Weight in the FICO Score Formula
Filed Under Credit History | Leave a Comment
There are several different pieces of information that help to calculate your FICO score. All of it is found on your credit report. Several factors like how long is your credit history and how much do you owe carry large weights. So do the types of credit you use and how often you apply for new credit. The one piece or pieces of information that make up the largest portion of the FICO score formula is your payment history. Why it that?
First, you must know that 35% of your FICO score is made up by your payment history. And this is a record of all your accounts on your credit report and your payments to these accounts. Any late payments are seen as a negative item and are analyzed based on their severity, how recent and how often.
The reason why your payment history carries such a large weight is due to the relationship of default to late payments. There is a direct relation to someone who consistently pays late and a person who will default on a loan. Since the main function of a credit score is to give creditors a quick way to assess your risk, this fact makes your payment history carry the largest weight.
Also, the late payments taken into account by the FICO score formula are the last seven years on your credit report. Besides bankruptcies, this is one of the longest and lasting effects on your score. As time passes the benefit of the FICO score is that it gives more value to the recent transactions over the old ones. That is not to say they do not matter.
That being said; paying your bills on time is one of the best things you can do for your FICO score. You should try to never miss a payment. The only way to get one of the best score that will qualify you for the lowest interest rates is to be diligent with your payments. Develop a budget or a plan that you stick to every month to ensure you have everything paid and it is paid on time.
By: William Lathrop
First, you must know that 35% of your FICO score is made up by your payment history. And this is a record of all your accounts on your credit report and your payments to these accounts. Any late payments are seen as a negative item and are analyzed based on their severity, how recent and how often.
The reason why your payment history carries such a large weight is due to the relationship of default to late payments. There is a direct relation to someone who consistently pays late and a person who will default on a loan. Since the main function of a credit score is to give creditors a quick way to assess your risk, this fact makes your payment history carry the largest weight.
Also, the late payments taken into account by the FICO score formula are the last seven years on your credit report. Besides bankruptcies, this is one of the longest and lasting effects on your score. As time passes the benefit of the FICO score is that it gives more value to the recent transactions over the old ones. That is not to say they do not matter.
That being said; paying your bills on time is one of the best things you can do for your FICO score. You should try to never miss a payment. The only way to get one of the best score that will qualify you for the lowest interest rates is to be diligent with your payments. Develop a budget or a plan that you stick to every month to ensure you have everything paid and it is paid on time.
By: William Lathrop
Dec
3
I recently got a Household Bank credit card in order to help build up my credit score. I have only used the card for small purchases and have paid off the balances for 2 months (the amount of time I’ve had the card) but no payments have shown up on my credit report as of yet. I was under the impression that Household Bank reported to the credit bureaus every month. Does anyone know when the payments might show up?
Dec
2
Credit Reports Demystified
Filed Under Credit Report | Leave a Comment
Anyone who has ever applied for any type of credit like a credit card, a mortgage, or even a cell phone has likely had their credit report checked. If the report says that you are late paying bills or have a ton of debt, you could have to pay a higher interest rate or even get turned down altogether.
Scott Mitic, CEO of an Identity Theft Protection service, says it quite well: the “credit bureaus are at the center of our credit-eco system in the U.S. And it’s hard to think about a set of companies that are more instrumental in the life that we live”.
What is a Credit Report?
A credit report is basically a file that a Credit Reporting Agency (CRA) keeps on you. Despite what many people think, your credit score does not say whether you have “good credit” or “bad credit” and if you are a risk. That determination is made by the lenders. All a CRA does is collect the information and then sell it. The information on your credit report is an important factor, but may not be the only one that determines whether the loan is made.
Another misconception is that your credit report is a “credit score” (you’ve probably heard of FICO). The credit score is a tool that lenders used based on a special formula that does use the information in your credit report, but the score itself is not part of the report.
Who can access your Credit Report?
Who can see your credit report is outlined by the Fair Credit Reporting Act. Anyone who accesses it must have a “permissable reason” to do so. The groups that can see it are:
Potential Lenders – Credit card companies, mortgage lenders, landlords, and other lenders are the most common. Whenever they request to see your report, a note of that becomes actually part of the report (called a “hard inquiry”). More on that later. Potential employers – A special (less detailed) version of your report. They must have written permission to do so. All they are able to see is how you make payments and handle debt, which (theoretically in their mind) shows your trustworthiness. This is a “soft inquiry” which does not show up on your report. Pre-approved credit card offerers – They can not actually see your credit report (thankfully), but they can pull a specially screened list to see if you qualify. This is also a “soft inquiry” which does not appear on your report. You – Obviously, you are able to see your own report.
What is on a Credit Report?
Credit history – Bill paying history (late payments etc.), balances, credit limits, open or closed accounts Personal information- Name, address history, work history, social security number Public information – Information from public records such as bankruptcies, court orders, tax liens, etc. Inquiries – Any company who has done a “hard inquiry” shows up. This is why you want to be careful in how many credit cards you sign up for or loans you request, because every time a company runs a credit check, that becomes part of your report (whether you take the loan or not). Disputes – If there is a dispute over something on a report, both your statements and the lender’s will be noted.
What do creditors look for?
Potential lenders make the decision whether or not to extend credit based on the contents of the report. Here are some of the things that they look for:
Missed payments – Payment history is a large factor. If you have a bunch of missed or late payments, lenders would be less inclined to take a risk of the same thing happening to them
Debt/Income ratio – Lenders want to make sure that you have enough income to handle debt payments
Inquiries – As mentioned, whenever a lender checks your credit using a “hard inquiry” a note is made on your report. If a potential lender sees a lot of hard inquiries over a relatively short period of time, they get concerned that you might be racking up the debt
Open accounts – If you have a bunch of credit cards or loans, even if you don’t use them all, lenders are concerned. They want to make sure that if you were to borrow all the amount that you theoretically could, you would still be able to handle it
Maxed-out credit – Do you typically max out your credit cards or lines of credit? That is a signal to lenders that you need to rely on credit to make ends meet
What do you do if you see errors?
According to the Public Interest Research Group, 79% of credit reports have errors, and 25% have errors significant enough to make lenders refuse credit.
It’s recommended that you check your credit report at least on a yearly basis. If you find a mistake, it can be a long and arduous process to fix it, but it’s important that you do. To correct the error:
Collect and prepare as much documentation as you can to support the correction Contact the relevant credit bureau, explaining what the error is. I recommend doing this via registered letter and including copies of all the documentation just to save back and forth later. Send a similar letter to the creditor as they will need to be involved sooner or later
Remember that neither the CRA nor the creditor have any vested interest in correcting the report, so expect some frustration when going through this process. Make sure you make note of every interaction with them and record dates, times, and who you talked to.
Legally, the CRA has 30 days to investigate your claim, so keep on them and be persistent.
Your credit report is one of the most important files in your life, and no one has motivation to make sure it is accurate but you. The more you know about it, the more power you have.
By: Ray Dando
Scott Mitic, CEO of an Identity Theft Protection service, says it quite well: the “credit bureaus are at the center of our credit-eco system in the U.S. And it’s hard to think about a set of companies that are more instrumental in the life that we live”.
What is a Credit Report?
A credit report is basically a file that a Credit Reporting Agency (CRA) keeps on you. Despite what many people think, your credit score does not say whether you have “good credit” or “bad credit” and if you are a risk. That determination is made by the lenders. All a CRA does is collect the information and then sell it. The information on your credit report is an important factor, but may not be the only one that determines whether the loan is made.
Another misconception is that your credit report is a “credit score” (you’ve probably heard of FICO). The credit score is a tool that lenders used based on a special formula that does use the information in your credit report, but the score itself is not part of the report.
Who can access your Credit Report?
Who can see your credit report is outlined by the Fair Credit Reporting Act. Anyone who accesses it must have a “permissable reason” to do so. The groups that can see it are:
Potential Lenders – Credit card companies, mortgage lenders, landlords, and other lenders are the most common. Whenever they request to see your report, a note of that becomes actually part of the report (called a “hard inquiry”). More on that later. Potential employers – A special (less detailed) version of your report. They must have written permission to do so. All they are able to see is how you make payments and handle debt, which (theoretically in their mind) shows your trustworthiness. This is a “soft inquiry” which does not show up on your report. Pre-approved credit card offerers – They can not actually see your credit report (thankfully), but they can pull a specially screened list to see if you qualify. This is also a “soft inquiry” which does not appear on your report. You – Obviously, you are able to see your own report.
What is on a Credit Report?
Credit history – Bill paying history (late payments etc.), balances, credit limits, open or closed accounts Personal information- Name, address history, work history, social security number Public information – Information from public records such as bankruptcies, court orders, tax liens, etc. Inquiries – Any company who has done a “hard inquiry” shows up. This is why you want to be careful in how many credit cards you sign up for or loans you request, because every time a company runs a credit check, that becomes part of your report (whether you take the loan or not). Disputes – If there is a dispute over something on a report, both your statements and the lender’s will be noted.
What do creditors look for?
Potential lenders make the decision whether or not to extend credit based on the contents of the report. Here are some of the things that they look for:
Missed payments – Payment history is a large factor. If you have a bunch of missed or late payments, lenders would be less inclined to take a risk of the same thing happening to them
Debt/Income ratio – Lenders want to make sure that you have enough income to handle debt payments
Inquiries – As mentioned, whenever a lender checks your credit using a “hard inquiry” a note is made on your report. If a potential lender sees a lot of hard inquiries over a relatively short period of time, they get concerned that you might be racking up the debt
Open accounts – If you have a bunch of credit cards or loans, even if you don’t use them all, lenders are concerned. They want to make sure that if you were to borrow all the amount that you theoretically could, you would still be able to handle it
Maxed-out credit – Do you typically max out your credit cards or lines of credit? That is a signal to lenders that you need to rely on credit to make ends meet
What do you do if you see errors?
According to the Public Interest Research Group, 79% of credit reports have errors, and 25% have errors significant enough to make lenders refuse credit.
It’s recommended that you check your credit report at least on a yearly basis. If you find a mistake, it can be a long and arduous process to fix it, but it’s important that you do. To correct the error:
Collect and prepare as much documentation as you can to support the correction Contact the relevant credit bureau, explaining what the error is. I recommend doing this via registered letter and including copies of all the documentation just to save back and forth later. Send a similar letter to the creditor as they will need to be involved sooner or later
Remember that neither the CRA nor the creditor have any vested interest in correcting the report, so expect some frustration when going through this process. Make sure you make note of every interaction with them and record dates, times, and who you talked to.
Legally, the CRA has 30 days to investigate your claim, so keep on them and be persistent.
Your credit report is one of the most important files in your life, and no one has motivation to make sure it is accurate but you. The more you know about it, the more power you have.
By: Ray Dando