Mike Clover asked:


Annualcreditreport gives you a credit report free once a year, but they don’t give your credit score. I have been a lender for 7 years, and believe me when it comes to getting your loan done everyone looks at credit scores. Your credit score is a bench mark for banks to sell your loan on the secondary market. Typically investors use your middle credit score to determine your creditworthiness. Here is what myFICO® says in regards to how important it is to know your credit score.

How credit scoring helps you

Credit Score gives lenders a faster snapshot of your credit risk. Most lenders are now using FICO® to determine your score. Before the scoring process was implemented there was a biased opinion of your credit. Now there is less none bias opinion of your creditworthiness with credit score automation process with all 3 credit bureaus. When pulling your credit report with all 3 Credit Bureaus you typically get a score. Since annual does not provide this, you have to get your report through other service providers.

Here are some advantages of credit scores.

* You get loans faster Your credit scores can be delivered with a few key strokes with today’s technology. With the speedy process this helps lenders speed up the decisions making process. Even mortgage applications can be made within ours, instead of weeks.

* Credit Decisions are fairer Credit decisions can be made of facts instead of emotions. Factors like your gender, religion, race, marital status and nationality are not considered by credit scoring.

* More Credit is Available

Lenders can approve more loans because the credit scoring process gives them the information on which to base there decision on. It allows lenders to identity individuals that are likely to perform well in the future even though they have had issues in the past. Each lender has its own credit score guidelines, so if one denies you, you may get approved elsewhere. The use of credit scores gives lender the confidence to offer more credit to people since they better understand the risk they are taking.

* Credit mistakes count for less

If you have credit problems in the past, credit scoring does not let that haunt you forever. Past credit problems fad as time passes as long as new good credit patterns show up. Credit scoring weighs all credit in a file, as opposed to focusing primarily on past issues.

* Credit Rates are lower

The cost of loans decreases when more credit is available. The process of automation in the credit process is less because of the efficiency of the process, which is passed on to the consumer. Buy using the scoring process there are less defaults, and in returns saves the consumer in the long run. Credit Scores have revolutionized the lending arena, and has driven down cost for everyone.

Conclusion:

Now you know why you need to know your scores and how important it is. Recent studies show that 1 out of 4 credit reports have incorrect information on them. Plus identity theft is the fastest growing crime in America. You need to check your free credit report with scores every 90 days just to be safe in today’s times. Since your scores are the core in determining whether they will lend you money, shouldn’t you know what they are ? The answer to that is yes.

keith williams asked:


Improving your credit score is very important and simple to do. Some people feel like giving up on situations like this not knowing the easy steps and procedures it takes to get on the right track to boost their credit score. You can get on the right track by simply taking these 8 tips to improve your credit score.

Tip #1 Understand where credit scores come from.

If you are going to improve your credit score, then logic has it that you must understand what your credit score is and how it works. Without this information, you won’t be able to very effectively improve your score because you won’t understand how the things you do in daily life affect your score.

If you don’t understand how your credit score works, you will also be at the mercy of any company that tries to tell you how you can improve your score – on their terms and at their price.

In general, your credit score is a number that lets lenders know how much of a credit risk you are. The credit score is a number, usually between 300 and 850, that lets lenders know how well you are paying off your debts and how much of a credit risk you are.

In general, the higher your credit score, the better credit risk you make and the more likely you are to be given credit at great rates. Scores in the low 600s and below will often give you trouble in finding credit, while scores of 720 and above will generally give you the best interest rates out there. However, credit scores are a lot like GPAs or SAT scores from college days while they give others a quick snapshot of how you are doing, they are interpreted by people in different ways. Some lenders put more emphasis on credit scores than others.

Tip #2 Keep the contact information for credit bureaus handy.

The three major credit bureaus are important to contact if you are going to be repairing your credit score. The major three credit agencies can help you by sending you your credit report. If you find an error on your credit report, these are also the companies you must contact in order to correct the problem. You can easily contact these organizations by mail, telephone, or through the Internet

Equifax Credit Information Services, Inc Address: P.O. Box 740241

Atlanta, GA 30374

Telephone 1 888 766 0008

TransUnion LLC Consumer Disclosure Center Address: P.O. Box 1000

Chester, PA 19022

Telephone 1 800 888 4213

Experian National Consumer Assistance Center Address: PO Box 2002

Allen, TX 75013

Telephone 1 888 397 3742

You may want to note this information wherever most of your financial information is kept so that you can easily contact the bureaus whenever you need to. Your local yellow pages should also have the contact information of these credit agencies as well.

Tip #3 Develop an action plan for dealing with your credit score.

Once you have your credit report and your credit score, you will be able to tell where you stand and where many of your problems lie. If you have a poor score, try to see in your credit report what could be causing the problem:

Do you have too much debt?

Too many unpaid bills?

Have you recently faced a major financial upset such as a bankruptcy?

Have you simply not had credit long enough to establish good credit?

Have you defaulted on a loan, failed to pay taxes, or recently been reported to a collection agency?

Tip #4 Pay your bills on time.

One of the best ways to improve your credit score is simply to pay your bills on time. This is absurdly simple but it works very well, because nothing shows lenders that you take debts seriously as much as a history of paying promptly. Every lender wants to be paid in full and on time.

If you pay all your bills on time then the odds are good that you will make the payments on a new debt on time, too, and that is certainly something every lender wants to see. Experts think that up to 35% of your credit score is based on your paying of bills on time, so this simple step is one of the easiest ways to boost your credit score.

Tip #5 Avoid excessive credit.

If you have many lines of credit or several huge debts, you make a worse credit risk because you are close to “overextending your credit.” This simply means that you may be taking on more credit than you can comfortably pay off. Even if you are making payments regularly now on existing bills, lenders know that you will have a harder time paying off your bills if your debt load grows too much.

The higher your debts the greater your monthly debt payments and so the higher the risk that you will eventually be able to repay your debts. Plus, statistical studies have shown that those with high debt loads have the hardest time financially when faced with a crisis such as a divorce, unemployment, or sudden illness.

Tip #6 Pay Down Your Debts

If you have a lot of debt, your credit score will suffer. Paying down your debts to a minimum will help elevate your credit score. For example, if you have a $1000 limit on your credit card and you regularly carry a balance of $900, you will be a less attractive credit risk to lenders than someone who has the same credit card but carries a smaller balance of $100 or so. If you are serious about improving your credit score, then start with the largest debt you have and start paying it down so that you are using a less large percentage of your credit total.

In general, try to make sure that you use no more than 50% of your credit. That means that if your credit card has a limit of $5000, make sure that you pay it down to at least $2500 and work at carrying no larger balance. If possible, reduce the debt even more. If you can pay off your credit card in full each month, that is even better. What counts here is what percentage of your total credit limit you are using – the lower the better.

Tip #7 Have a range of credit types.

The types of credit you have are a factor in calculating your credit score. In general, lenders like to see that you are able to handle a range of credit types well. Having some form of personal credit such as credit cards and some larger types of credit such as a mortgage or auto loan and paying them off regularly is better than having only one type of credit.

Tip #8 Look out for identity theft.

Many people who are careful about paying bills on time and having minimal debts are shocked each year to find that they have low credit scores. In many cases, this happens as a result of identity theft. Identity theft is a type of crime in which people take your personal information and steal that information to pose as you in order to get access to your accounts or identity.

For example, someone with your PIN numbers can remove small amounts of money from your bank account each month or someone can use your name and personal information to get credit cards in your name and use those credit cards with no intention of paying back the money. You are stuck with the large debts and the poor credit score.

To prevent identity theft, always check your account statements carefully each month. Report any suspicious activity or any charges you don’t recognize at once. Also check your credit report regularly and immediately investigate any new credit accounts you do not recognize – this is the best way of detecting and acting on identity theft.