Wednesday, June 5, 2013

How To Raise Your Credit Score And Enjoy Low Interest Rates





Raising your credit score can be a daunting task if you do not have a clear idea of what actually impacts your score. The first step to take is to understand the FICO scoring model, which tells you what kind of importance is given to each attribute of your credit report. As per the FICO scoring model, paying bills on time is one of the most important factors. 35% of weightage is given to this factor.
That said, paying your bills on time itself may not to catapult your score to the next level. There are several other parameters on which your score can be calculated. Your current debt is another important factor that determines your score as 30% weightage is given to it.
If you are able to maintain a low current debt and are able to pay your bills on time, your credit score should ideally be in a risk free zone. However, its important to monitor your credit on a monthly basis as a couple of late payment and an extra credit cards can bring down your score rapidly.
Its also a great idea not to indulge in new credit applications as this is one of the factors used in the calculation of your FICO score. 10% of weightage is given to new credit applications while your score is being determined. If you already have considerable current debt, its advisable not to apply for any new credit applications.
When it comes to credit cards, its best to use select credit cards on a consistent basis, preferably the ones that have a high credit limit. This way, it's easy to remember your billing dates and you will not have to pay off several different credit cards every month. At most, its good to use 2 to 3 credit cards. If you already have too many cards try and pay off these cards and close those accounts. This should assist you in increasing your points.
Another great thing to do is to register with companies that can provide regular credit alerts. These services can be of great assistance as they can instantly tell you your credit score from all three credit agencies and help you monitor and manage your credit efficiently. However, one must always be aware that there could be fraudulent companies out there trying to take all your information and stealing your identity by claiming that they can provide you a free score. Usually, most legitimate companies charge money and provide a free trial so that we can assess their service before deciding to pay them. Such services are rare and not so easy to find. Thorough research is required before registering with any such companies.
Hopefully, this information should give you some useful tips on how you can raise your credit score. Increasing your credit score will ensure that you get all your future loans at extremely low interest rate, which is a great benefit. Therefore, it makes perfect sense to invest in services that can help you monitor your score consistently.

Saturday, June 1, 2013

Credit Score Ratings


 Credit score ratings are a numerological representation of your ability to use credit wisely. In short, when you borrow money, use a credit card, apply for a loan, or make payments on those debts, you are creating a credit history. There are three credit bureaus who gather information reported from your creditors (those who you do business with such as credit card companies and other lenders) and keep a file on you.
All of the information about your credit use, including your personally identifiable information is managed by these bureaus. When another creditor wants to loan to you, it will request a copy of this report. The goal is to learn as much as possible about what type of borrower you are. Do you make payments on time? Do you use all of your available limit? Do you make payments to reduce how much debt you have or are you applying for new debt.
Why It Matters
Credit score ratings matter. If your score is low, this means you are a high risk to lenders. Many lenders turn down borrowers who are have a very low credit score. If you are given a loan with a low score, you will pay for it with a very high interest rate. Even more importantly, some employers use this information to determine if you should be hired. Keep your score as high as possible is critical.
How to Monitor Your Score
To monitor your credit score ratings, the first step is to check your credit report with each of the three bureaus. You can do this one time per 12 months free of charge. However, it does not include your actual score. It will only allow you to verify that the information contained within your file is up to date and accurate. It is up to you, then, to ensure that you make wise credit decisions so your score can increase.
Additionally, you can purchase a credit monitoring service. This type of service allows you to pay a small fee each month that will allow you to know what your score is. If there is a change to it, it will tell you that there is a change. You can monitor any changes in accounts, balances, and payments. This type of tool is also excellent for ensuring that your identity is protected.
Credit score ratings are a critical component to managing your ability to borrow money. If you plan to buy a car, get a job in a financial industry, get cheap car insurance, or purchase a home, you need a good score. By monitoring your score on an ongoing basis, you can make better decisions for yourself moving forward.