Follow 6 Simple Rules to Have Higher Credit Scores in 2013

6 rules to increase your credit scoreNumbers do play an important role in our lives. If you believe in numerology, you can know how important the numbers 0 to 9 is. If we look into the financial state of a person, here also numbers play a big role. Those numbers are called the credit score.

You should try to keep them at a peak point. These powerful numbers help you to determine that you are going to buy a new car or home loan. Banks use credit scores to determine the credit risk you have. Higher the scores, the more appealing you look on the paper, which can make you land on the better interest rates. Even when you apply for the jobs, the employers check out your credit scores, to know if they are risks to hire you or not.

You need to have an outstanding credit score, because the lenders are forced to write off record levels of credit card debt and they are getting choosy about which borrowers are going to give the most-favorable terms. Due to the recession, the lenders are closely analyzing the credit scores according to the credit expert Bill Hardekopf of LowCards.com. Persons having FICO score more than 700 generally considered as the one with great scores.

If you want to land on to the best credit, then follow these six simple rules to have higher credit scores.

Check Out for Errors in Credit Reports

Experts like Hardekopf are of the belief that just a single error in the credit report can ruin the scores. Generally, credit errors occur when credit-reporting companies mix up your activities with those who share the same name. Mistakes occur commonly as the result of identity theft. For example, if you are an ID theft victim, your credit report payment history will account for 35% of a credit score. Check to become sure, that are you actually responsible for what appears on the credit report.

Try to get some free and online copy of credit reports once a year from the three of the credit bureaus: Equifax, Experian and TransUnion. Credit experts suggest that spacing out free copies will help you to receive one every four months and you can go for an identity theft check or clerical errors throughout the year. If you are able to find any errors on your credit report, then contact the nearby credit-reporting agency soon to correct them.

Do Not Buy Too Many Cards

If you want to elevate your credit scores, then limit the number of credit cards and other lines of credit that you apply. Every time you apply for a new credit card, the application shows up on your credit report, which is going to hurt your scores.

Do not apply for more cards. If you do so then you will be turning into a “credit seeker”, a less desirable label for those who maintain a good credit. Experts say that you do not need to apply for the credit, which you do not need or unnecessarily you will be messing up your credit scores.

Lessen Your Debts

Many credit card users are of the belief that they have to carry credit card debts to have good credit scores. The concept is very wrong says experts like Weston, an MSN Money columnist. The idea is, she says – the less credit you use, the better it is for your scores.
Idealistically you do not want to use less than 10% of your credit limit. If the total charges approach the credit limit available on the credit per month, then you may continue to hurt your credit score in spite of paying your bills regularly. Balance that is reported to the three credit bureaus is calculated from the date, which the bank chooses, so the reporting date may be the one when you are closer to credit limits.

Pay the Bills Regularly

Do you want to wait until the first of the month to pay off your bills? Whenever your credit card payments are due you should pay them immediately. Try to make smaller payments throughout the year to lower the debt quickly. Such payments are the one that helps your credit scores to elevate because they lower the debt utilization ratio. This accounts about 30% of your credit score. That is the ratio, which tells that how much debt you are currently carrying on your credit cards divided by the total credit limit on all your credit cards.

Sometimes Having More Credit Is Good

Do not fear to ask about the credit line increase, which in turn is going to increase the debt utilization ratio. If you have a credit card, you like to use it often and if you are good at making payments, then ask for a credit line increase.

However, yes, you need to proceed with a little caution. You should not ask for a credit line unless you are good cardholder. If you are not having a good credit history then do not ask for a credit history or the bank may take you as a risk and reduce your limit in turn. Be careful, since it can backfire.

Make the Credit Cards Stay Active

Just having a credit card is not enough to maintain a good credit score. It is important to use the credit card, even if you just buy a snack at McDonalds. You have to show that you are responsible enough to use the credit card responsibly. Do not close the credit card accounts that you do not use, that will bring down the credit scores. Keep your accounts active, so that you can establish the credit history as much as possible. The longer you have an account, the better it is.

Remember the strong numbers of credit scores are very important for any kind of loan or financial steps. Therefore, if you want to have a smooth financial path this year, then follow these six steps and enjoy a high credit score and a healthy credit report.

Author’s Bio: Charles Malcolm is a financial columnist for different blogs and a consultant by profession. He advises people on various financial issues like debt, mortgage, insurance and loans to make them enjoy a financially free life. He is now an acting consultant for the call centers India that is acclaimed for their 24- hour customer support.

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Recovering Your Credit Score After Bankruptcy

Bankruptcy signBankruptcy can be a very difficult experience. Many people feel a sense of guilt or shame when they admit that they can’t handle the debts that have accumulated over the years. Instead of wasting time thinking about what you can’t change from the past, focus on taking the right steps after bankruptcy. Focusing on what is in your control will help you rebuild a strong credit score as quickly as possible. Follow the steps outlined below to watch your credit score slowly rise from the ashes of bankruptcy.

Stick to Bill Deadlines

One of the first ways you build credit as a young adult is by paying your bills on time. This is also true for older homeowners who are trying to bounce back after bankruptcy. Pay each bill early or on time to start adding a few points each quarter to your overall credit score. One late payment will have a serious effect when your score is already very low. If you have trouble keeping track of your mortgage and utility bills, mark the dates on a calendar next to your bed or use a smart phone app to send yourself regular reminders.

Focus on building a savings account for emergencies. Illness or job loss shouldn’t keep you from paying your bills. Taking out emergency loans is much harder after a bankruptcy. An emergency fund can keep you from relying on high interest payday loans that can sink your credit even further. If there are any debts that were reaffirmed during your bankruptcy, pay them off as quickly as possible while building up your savings.

Start Small With Additional Borrowing

A very small unsecured loan or high interest credit card is the next step in rehabilitating your credit. While most lenders will be reluctant to hand you $10,000 after bankruptcy, you should be able to find a $500 loan or a card with a low spending limit. Make small purchases on the credit card and repay them within the same month. Demonstrating that you can handle credit responsibly will encourage the credit tracking bureaus to start raising your score. One minor loan every three months creates quite a boost if you can pay it off within just a few weeks after borrowing.

Check that your lender reports your information to the credit bureaus. Many unsecured lenders don’t bother sending in your name and information, especially on low amounts. Work with a lender that will report each month on your timely payments and low balance.

Cut Your Costs

Most people go into bankruptcy because of sudden and unexpected costs. Bills for medical treatment or a lawsuit can cause your normal lifestyle to become completely unsustainable. However, these problems can always reappear after a bankruptcy. Adjust your lifestyle to your income and build as much savings as you can. A strong foundation will help you avoid a second bankruptcy if another unexpected expense hits you while you are struggling to recover from the first. Downsizing your home, swapping an expensive car for an affordable used model or cutting your entertainment budget could help you create a protective barrier of cash for emergencies. You find help tips on sites like Simply Finance to help you save more each month.

This article was contributed by SimplyFinance.

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Credit Scores And Your Interest Rates

Credit Scores And Interest RatesAs we already established having a good credit score not only enables you to get loans from lenders, but more importantly it reduces your annual interest rates quite significantly.

The tables below will show you real examples on exactly how a particular credit score affects your interest rates on mortgages, equity loans or auto loans.

30 Year Mortgage:

Credit Score Interest Rate
500-549 9,758%
550-579 9,077%
580-599 8,747%
600-619 8,305%
620-639 7,359%
640-659 6,814%
660-679 6,383%
680-699 6,169%
700-759 5,993%
760-850 5,771%

15-Year Home Equity Loan:

Credit Score Interest Rate
620-639 12,812%
640-669 11,566%
670-699 10,059%
700-719 9,287%
720-739 8,787%
740-850 8,487%

4-Year Auto Loan:

Credit Score Interest Rate
500-589 15,112%
590-619 14,443%
620-659 11,019%
660-689 9,478%
690-719 7,983%
720-850 7,179%

Once again this proves just how important maintaining a high credit score is. In the first case (30 year mortgage) the difference between the lowest and highest credit score is 3,987%. Since this type of loan is substantial the money you can potentially save simply by having a lower credit score is definitely nothing to laugh at.

In the second case (a 15 year home equity loan) you’ll be paying a 4,325% higher interest rate with the lowest possible score. Finally, on a 4 year auto loan you will have to pay double interest rate (7,933% higher) in case your score is between 500 to 589.

I strongly suggest that if you still aren’t giving enough attention to keeping your credit score high that you start doing it immediately. You can start by reading our articles about improving your credit scores which will give you enough tips to start with. Reducing your negative balance and paying bills on time are just some of the easiest ways to start improving your score as soon as possible.

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Remove Inaccuracies To Make Your Credit Report Blemish-Free – Boost Your Score

Repair Your CreditToday’s lending industry is a credit-based one and blotches on your credit report can cost you dearly. If you’ve gone through the hassles of bankruptcy or a foreclosure and have trashed your credit score, you need not fret as there multiple ways to become creditworthy again. You just need to get started and also remember that it is not going to happen overnight. The credit score of the borrowers often affect the lending decisions as apartment rates, insurance premium rates and even employment decisions hinge on your credit rating. The better your score is, the better will be the rates that you’ll be offered on the loans. With the increasing importance of credit scores, the consumers are taking more notice and are opting for credit repair. If you too are desperately trying to know the ways in which you can repair your credit, read on.

  • Order copies of your credit report: The top 3 credit bureaus, Equifax, TransUnion and Experian are always ranking you in accordance with your credit score. The first job that you have to do is to order a free copy of your credit report from any of the three credit reporting agencies. It is likely that the different credit reporting agencies will speak differently about you and thus it is better to take out a credit report from all the three credit bureaus so that you know what steps to take.
  • Scrutinize your credit reports carefully: According to the recent reports, every consumer has an error in at least 1 report taken out from any of the credit reporting agency. Review carefully for all the erroneous information that is dropping down the score so that you can track them and remove them. Remember that your credit report is a true reflection of your present financial worth and therefore the better your score is, the better will be your true picture.
  • Dispute the errors and keep documents: The errors that you locate should be disputed by filling out the dispute form provided with your credit report. You should clearly identify every mistake that is reducing your credit score and also send a photocopy of the credit report with the mistakes. Keep documents of each and every copy and the forms, letters and all other documents to avoid discrepancies in the near future.
  • Repay high interest debt: Now is the time to work out a spending plan and also repay your high interest debts at the same time. Call your creditors, set up a meeting date with them, revise the repayment structure and maintain payments so that you can boost your credit score.

Therefore, when you’re spending sleepless nights thinking about the prospects of taking out a loan at an affordable rate with tarnished credit score, go for credit repair. Take the steps mentioned above instead of paying a professional credit repair program.

This guest post was contributed by Creditmagic.org, a community to help you repair your credit, get free consumer credit counseling and tips.

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Credit Scores And Your Mortage

MortgagesA mortgage is a loan that you take in order to purchase a piece of property. Like any other loan, there is a risk to the lender that you will borrow the money and not pay it back. Although the risk to the lender is lower since the home or property acts as collateral to secure the loan, banks still do not want to have to foreclose on a home. Therefore, banks and mortgage lenders will take a number of different steps to determine if you can qualify for a mortgage or not. One of the most important of these steps is checking your credit score to determine if you are credit worthy or not.

Your Credit Score

Your credit score is a number, of three digits, determined by a specific formula. The basic formula used in most cases was created by the company known as Fair Isaac, which is why you sometimes hear a credit score referred to as a FICO score. Scores generally range from the mid-300′s to 850, with a score above 720 typically considered to be a “good” score.

The formula used to determine your credit score looks at several different facets of your past borrowing behavior. For instance, one important component in determining your credit score is whether you have paid your bills on time in the past or whether you’ve ever been late or failed to pay. This is vitally important to creditors because if you failed to meet your obligations in the past, there’s a good chance you will do so again. Your payment history is responsible for determining around 35 percent of your FICO score.

Other factors that come into play when determining your score include how much you are actually using of the credit you have, how many accounts you have open and how old they are, the different types of credit accounts you have and how many “inquiries” you have (inquiries are placed on your report when you apply for new credit).

Typically, lenders like to see a low utilization of the cards you have, as maxing out all of your available credit can indicate a debt problem developing. Lenders also like to see a long credit history, a mix of different types of credit and few new applications that could indicate you are starting to run up a lot of debt.

How Your Score Affects Your Mortgage

Knowing how your score is determined and whether it is bad or good is absolutely essential, as your credit score has a direct impact both on whether you will be approved for a mortgage loan and on how much you will pay if you are approved for the loan.

A very low credit score can prevent you from having your mortgage approved at all, as the mortgage lenders will see you as a significant credit risk and a person likely to default. After all, if you haven’t handled your money and credit in the past, there’s nothing to convince the lender that you will do so in the future.

A high credit score, on the other hand, can make it much easier to qualify for a mortgage loan. When you do qualify, you will also be rewarded with the lowest interest rates available. The lower your interest rate, the lower it will cost to borrow the money and the lower your monthly payments will be.

Those with a credit score in the mid-range should be able to qualify for a mortgage but may have slightly higher interest rates. By looking at a mortgage calculator, you can see the specific impact these higher rates will have. However, putting a larger down payment down and shopping around for a lender can still make it possible to get an affordable mortgage with decent credit.

This guest post is contributed by SimplyFinance.co.uk.

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Establishing Credit History

Credit HistoryOne thing many immigrants realize when they come to the United States is that their credit history doesn’t follow them. America is a credit-centered culture. You need good credit to buy a house, finance a car and obtain educational loans and even to get a new job. Here are a few tips to help new immigrants establish a good credit history and start enjoying the American life.

Open a Bank Account

Newly arrived immigrants should first apply for a Social Security number. Once you receive your number, open a checking or a savings account at a local bank. Keep this account in good standing to show potential creditors that you can manage money.

Get a Bank Credit Card

Obtain a secured credit card from your bank. A secured credit card simply means that the funds in your checking or savings account will be used as collateral if you don’t pay off your balance in a timely manner. Keep in mind that banks usually freeze some of your funds, typically the same amount as your credit card limit. Secured credit card limits tend to be low, but once you’ve established the fact that you make timely payments, you can apply for an unsecured credit card from your bank.

Obtain a Department Store or a Gas Credit Card

Department store and gas credit cards are usually easy to obtain. Just make sure that you make the monthly payments on time and the credit card company will send a positive report to the credit bureaus. Some gas and department store cards have very high interest rates, however, so don’t charge more on the card than you can pay off in a single month. Once you’ve proven that you’re responsible enough to make reliable payments, more companies will be willing to send you credit cards.

Use a Co-Signer

If you have an American member of the family with a good credit history, consider asking that person to co-sign a credit card or a loan application with you. Bear in mind that many people are reluctant to get into a co-signing situation because the person who co-signs takes on the responsibility for your debt if you cannot pay.

Finance a Store Purchase

Many retail stores allow you to purchase items on credit without paying interest for a set amount of time, typically 90 days. This financing is a kind of loan, so it helps you establish a good credit history if you pay off your balance on time. Try to pay off the entire purchase before the allotted “no interest” time expires to avoid paying high interest rates or any hidden fees.

Apply for a Major Credit Card

After spending about six to twelve months building up good credit, apply for a card from a major credit card company. Use the credit card comparison tool at Moneysupermarket to find a card with a low interest rate. Be careful that you don’t overextend yourself on credit while trying to build your credit history. Remember that establishing a good credit history takes time and patience.

Guest post contributed by Moneysupermarket.

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Protect Your Identity, Protect Your Credit Scores

One of the unfortunately frequent causes of low credit scores is also identity theft. ID theft has been growing rapidly over the past years and despite constant battles to prevent and stop it will surely never go away. There are plenty of ways you can get your identity stolen today: phishing websites, dumpster diving, employee records are just some of them. When you’re applying for a loan or mortgage you will also have to give out your personal details which puts you at additional risk. Some of the companies do in fact exist only to scam people and steal their personal records, which inevitably leads to identity theft.

Every year in the US millions of people fall victims to identity theft. The average numbers victims spend recovering from stolen identity is 330 hours: 26-32% of victims spend 4 to 6 months dealing with their case, and 11-23% report dealing with their case for 7 months to a year. That’s months of sleepless nights, and plenty of lost money as well. Read on for some other additional statistics on identity theft:

  • Victims lose $1,820 to $14, 340 in wages dealing with their cases
  • Average expenses on ID theft cases is around $1200
  • Nearly half (47%) of people have trouble getting a credit or a loan, as a direct result of their identity being stolen
  • 19% of all victims have higher credit rates, and 16% have to pay higher insurance rates
  • 66% of victims’ personal information is used to open a new credit account in their name
  • Only 20% of victims find it easy to reach someone in a credit reporting agency after receiving their credit report
  • 20% of ID theft victims will have the misinformation and errors removed from their credit report after their first request for the credit reporting agency to do so

Just by reading these short statistics on what happens to people after they get their identity stolen should give you a reason to find out more about how you can prevent it from happening to you. Getting your identity stolen is one of the worst things that can happen to someone, not because it will lower your credit score, but because it will take months and sometimes even years to recover from it. That means months of sleepless nights and thousands of dollars spent.

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4 Steps You May Take To Repair Your Credit Yourself

If you are struggling under a lot of credit card debts, then you should consider solutions like credit card settlement or consolidation in order to get rid of your debts. However, it is also very important for you to keep track of your credit score if you do not want to fall into any difficulties.

It is essential that you maintain a good credit score as that determines whether you will get loans, employment, shelter, etc. Thus, if your credit sore is low due to rising debts, then you should take care to ensure that you do something about it. This means that you are to repair your credit score. It is important for you to know that you do not need to find a reputable company in order to repair your credit, you can do it yourself.

Some steps that you must follow in order to repair your credit yourself are as follows.

1. Getting your credit reports: In order to repair your credit you must first be aware of what you are to repair. It is impossible to determine this until and unless you take a look at your credit report. Thus, the first thing that you must do in order to find out what is it that you have to repair, is to order your credit report. You must order your credit reports from all the three major credit bureaus. They are Equifax, Experion and Trans union. It is important that you get reports from all the three bureaus because some of your creditors will only report to one credit bureau. None of the credit bureaus share any information. Thus, if you want to get a complete picture of your credit scenario, then you must get all the three reports. This will also ensure that you get to know how and where you are needed to repair your credit report.

2. Examining your credit report: After you get all your credit reports you are to go through them carefully in order to find out if there is any sort of problem. When you come across any information that you think is wrong, then you should mark it with highlighters. You must look for any accounts that are not yours as well as payments that have been reported incorrectly. Look for any inaccuracies as tracing these will help you get your credit repaired.

3. Disputing what is not accurate: If you think that any particular information on your credit report is not accurate, then you have the full rights to dispute it. The instructions that you should be aware of when disputing information in your credit report is provided to you when you order for a credit report. In case you did not receive this, then you should send a letter to the credit bureau. This letter should give a detailed description of the information that you think is inaccurate. Along with the letter you should also send a copy of your credit report with the inaccurate sections clearly highlighted.

4. Handling past due accounts: You should be aware that your payment history plays a very large part in making your credit score. Thus, if you have many past due accounts, then your credit will get affected very badly. If you want to take care of your credit score, then you should try and improve this. What you should aim at is to get your past due accounts reported as paid or current. You should also try and work with your debt collectors and get your collection accounts taken care of. In order to improve your credit score you should also try and pay off all charge offs.

These are a few ways in which you can try to improve your credit score and lead a healthy financial life.

Contributed by Debt Community Member.

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How To Get a Free FICO Credit Score Report

Did you know you can now get a free credit score report from one of the leading financial organizations in the World which has an unmatched level of commitment and resources?

myFICO.com is a division of Fair Isaac Corporation (FICO) whose clients include all of the Top 100 U.S. Credit Card Issuers and 9 of the Top 10 Fortune 500 List Worldwide.

FICO has sold more than 100 BILLION Credit Scores to date and they are the most used Credit Bureau scores in the world. They are the ones making the credit score standards and the best place to get your free credit score report, period!

You too can now get your credit score report straight from the most trusted and reliable source and find out exactly what your FICO score is. Be sure to take advantage of it!

Note: myFico no longer offers free credit scores. If you need to check your credit score for free now please click here.

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