Anthony J Smith asked:


In the United States, a credit score is a three-digit number based on a person’s past credit files, and represents that person’s creditworthiness. The score is based primarily on credit information obtains from the three major credit bureaus, and the credit score determines the likelihood that a person will pay his or her bills on time. FICO is a credit score developed by Fair Isaac & Co., and it is used by many mortgage and lending companies to determine the possibility of a client defaulting on financial obligations to the lenders.

A credit score is determined by past credit history, and it must be built up from scratch. Many different factors determine what your credit score will be, including number of accounts or loans, amount of total loans and debt, and even the length that the various accounts have been open. Whether or not payments are made on time consistently will also determine a credit score, as well as any negative marks including bounced checks or going over an account balance on a credit card. Because a credit score is important for trying to get loans, avoiding negative activity is important to build up a good credit score.

A good credit score is necessary when wanting to buy a home or property that requires a mortgage company, since many companies won’t lend to those who are a high risk for not paying it back. A low credit score can also impact those renting a home, since landlords would rather rent to someone who has shown they can pay their rent on time. A poor credit score can cause you to be denied by several types of lending companies, because a low credit score means the applicant is a high risk for defaulting on loans and financial obligations.

Because not everyone in the world has a perfect credit score, there are many companies that will still lend money to those with poor credit scores. Although this may seem like a credit score doesn’t mean anything since almost anyone can get a loan, but it’s completely the opposite. Those with low credit scores will end up paying much more in the long run, since credit card and mortgage companies charge higher interest to those with lower credit scores. Having a good credit score can save you money by avoiding high interest charges, and can also give you the ability to apply for almost any loan or credit card that you wish.

Credit card companies that require their customers to have good credit scores usually offer great benefits, including balance transfer options and even rewards programs. Those with good credit are also typically approved for a higher loan, giving them the ability to buy whatever they may want or need before they have the money available.

Having a good credit score is a great way to save money and enjoy the ability to take out a loan, but it can be devastating for those with low credit who end up with outrageous interest charges. Having a low credit score isn’t the end of the world though; it can quickly be improved by keeping negative marks from your credit report. Make sure to make all of your monthly payments for loans and bills on time each month, and avoid taking out too many loans or credit cards. Try to lower your total debt each month rather than paying off a card and then charging it back up, since high amounts of debt can decrease your score.

Isabel asked:


Are you hesitant to apply for a home loan just because you have a bad credit score? Good credit score is important but if you have bad credit it does not mean the end of the world. You can still get a home loan if you have a bad credit score.

You need to be very careful in your decision at the time of applying for the loan. Do not haste for the loan to the first offer you are presented. Many money lenders might try to rip you off just because of a bad credit history. Do not accept whatever they have to offer, look out for other options. There might be a better option waiting just next door.

A good search can help you fund lenders who are willing to provide you loan at a much lower interest rate.

Is credit score important?

Credit score is definitely important. No matter it is just a three digit number but it has great importance in today’s business world. Your credit score directly reflects your credit standings and your capacity to repay the loan. A Bad credit score does’nt makes it impossible to get the home loan but it will certainly affect the interest rate you’ll have to pay.

One of the best ways to improve your credit score before applying for the loan is to do credit score repair. All you have to is get a copy of your credit score from any credit agencies. In fact you need to check your credit score once in six months. The reason for this repair is that there might be certain errors in your credit report. Its quite possible you might have paid your dues but they are not recorded in the credit report. You have to notice all these errors and inform the credit agencies to do the necessary corrections. Remember a credit score repair can help you improve your credit score by quite a margin.

Bad credit score is definitely not the end of the world. Your home loan can still be approved. The only drawback is the high interest rate which could have been way low if you had a good credit score. Improve your credit score with the help of following tips

• Pay your dues on time

• Check your credit score at least once in six months

• Avoid creating multiple accounts. Close all unnecessary accounts. Remember zero balance accounts are also taken into consideration.

Isabella Rodrigues writes for credit-free-score.net,

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Kimberly B asked:


I would like a reputible company, I am trying to repair my credit for a home loan.

Jim Kemish asked:


Not all Scores are Equal

There are many credit scores available, but the only one that matters is your FICO score. FICO, by the way, is an acronym for Fair Isaac and Company, the developer of the score. This is the score that virtually all lenders use. Other scores attempt to approximate the FICO score, but frequently vary by a significant margin.

One Score with Three Names

The FICO score may be referred to by three different names. This is because the three bureaus have branded it for their own marketing. Equifax calls it a BEACON score, TransUnion calls it an EMPIRICA score, and Experian calls it the EXPERIAN/Fair Isaac Risk Model. Because of this you will hear of three different scores, although they are all a product of the same formula.

Why Are Your Three Scores Different?

Your three scores are different because each bureau gathers information from a slightly different mix of creditors. If you were to look carefully at your three reports you will notice that some accounts are missing on each bureau. Timing also plays a roll. A recent change in your credit may be picked up sooner at one bureau than another.

What is Included in Your Score?

Are you working on credit repair? Be proactive. But in order to influence your score it is essential to understand how it works. Here is an overview of the contributing factors.

Pay History

Your pay history is the big ingredient. This category includes installment and revolving accounts, as well as public records and collections. The age of a derogatory item diminishes its impact on your score. The first step in the credit repair process is to examine your report for obvious errors in this category which makes up 35% of your score.

Balances

Your account balances make up the next category. The relationship between the balance and the credit limit on your revolving accounts is a major factor. Anyone involved in a credit repair effort should minimize their revolving balances as much as possible. The relationship between the current balance and the original balance on installment loans is also taken into consideration. This category makes up 30% of your score.

The Age of Accounts

New credit will have a negative impact on your score, and those accounts that you have kept alive and healthy for years have a good impact. Closing old accounts is a common credit repair error to be avoided. This category makes up 15% of your score.

New Credit & Inquiries

New credit and recent inquiries are a factor. Many credit repair candidates open new secured credit cards for the long term benefit. But generally, anyone involved in credit repair should limit new credit activity. Either way you will lose a few points on this one. Fair Isaac weighs this at 10% of your score.

Type of Credit

The type of your credit is the final 10% of the calculation. Fair Isaac won’t define the perfect mix of mortgage, installment, revolving, and consumer debt, but in our experience the key to a long term successful credit repair effort is to be a moderate user of credit, make your payments on time, and try to keep those revolving balances down.

False Credit

As you begin your credit repair effort it is important to have reliable information. Amazingly, the same three credit bureaus that sell authentic FICO scores to lenders also sell unreliable estimated scores to consumers. Every day untold numbers of consumers go to TransUnion’s “True Credit” website and pay for what they believe to be their credit scores. What they get are deceptively named “TrueCredit” scores which vary significantly from the FICO scores used by lenders. Here is the (almost impossible to find) small print from the TransUnion website. “TrueCredit is not connected in any way with Fair, Isaac and Company; the credit score provided here is not a so-called FICO score. The credit scores of TransUnion may not be identical in every respect to any consumer credit scores produced by any other company.”

Real Credit Scores

Are you starting the process of credit repair? Do you want to see your real FICO scores? MyFico.com is the only place that consumers can purchase their authentic FICO scores. Want to save some money? It is handy to know that mortgage brokers typically look at all three FICO scores when pre-qualifying you for a mortgage. If you ask, they just might give you a copy of your report along with all three scores. It can’t hurt to save a few dollars!

Copyright © 2007 James W. Kemish. All Content. All Rights Reserved.