Understanding Your Credit Score and It’s Implications on Lending

Understanding Your Credit Score and It’s Implications on Lending

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Home Page > Finance > Understanding Your Credit Score and It’s Implications on Lending

Understanding Your Credit Score and It’s Implications on Lending

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Posted: Apr 22, 2010 |Comments: 0

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Most people have seen or heard commercials that advertise websites to check your credit report. What most people dont know is that your credit report does not include your credit score. Your credit report is more of a snapshot of your credit history that includes personal information, what kinds of credit you use (mortgages, credit cards, loans, etc), how long youve had credit accounts, whether you pay your bills in a timely manner, if youve had collections put out on lines of credit, banking information, and so forth. Its fairly easy to get a copy of your credit report. By law, the government grants every individual the right to a free annual credit report check, which you can get at AnnualCreditReport.com. However, there is still no absolutely free way to check your credit score.

So then, how do you check your credit score? Although none of them are free, there are several ways you can check your credit score. The first way is to purchase your credit score at AnnualCreditReport.com when you order your credit report. You can also purchase your credit score from each of the three nationwide consumer credit reporting companies; Equifax, Experian, and TransUnion. Although there is still some deliberation on how much these credit scores actually cost to order, most can agree they are in the range of – . You can also check your credit score by purchasing it directly from FICO, the Fair Isaac Corporation- they pretty much invented the model for credit scores and are considered the standard. Their score is usually based on a combination of data from both Equifax and TransUnion. There are other sites that you can order your credit score from, but they usually offer a free credit score in exchange for purchasing a service from them like credit monitoring.

Moving forward, now that you were able to check your credit score, what does it mean? First off, each individual actually has three credit scores at any given time because Equifax, Experian, and TransUnion all have separate databases that collect reports from different creditors, and receive the information at different times. But what do these scores mean? Your credit score is primarily used in credit decisions made by banks and other lenders of credit. The better your score, the less likely you are to seem risky to these lenders, and the more likely you are to be approved for lines of credit like home loans or auto loans.

Credit scores can range from 300 to 850, and the higher the number, the better. According to FICO, the median credit score is 723, which happens to be considered excellent credit. With ratings of 720 and above, you will likely get offers for the best interest rates from lenders. Once you dip below average, interest rates tend to go up from lenders. A credit score below 620 puts you in a category called sub-prime. In this range you can expect to pay much higher interest rates than a consumer with a 720 credit score. However, there are more and more lenders offering sub-prime loans, youre just going to pay higher interest because of your considered risk as a borrower.

Knowing your credit score is a very important tool in understanding how you are viewed to lenders and financial institutions. Depending on your score you can expect to be approved for loans with a prime rate, or possibly be denied lines of credit altogether. So take the time and check your credit score. In either case, it always helps to know where you stand.

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Diane Jurgens -
About the Author:

Dee Jurgens is the head copywriter for CyberLead, inc http://cyberleadinc.com specializing in auto sales leads http://www.carcredit.com delivering quality car loans for ten years http://myfreecreditscorenow.net Providing free credit scores for you and yours free credit score

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He has a good credit score and she has a terrible credit score. What happens to the scores when they get married?
I am trying to clean up my credit report and raise my scores, but it seems the more I do to help my credit score the lower it goes. I’m trying to purchase a home and in desperate need of help!
I am Cdn marrying a US. Moving to US My credit score is 800 his is so low – foreclosure on home, prior bankruptcy. Ths was over 3 years ago. When we marry do I “inherit” his bad credit

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Article Tags:
credit score, free credit score, credit report online

Repair Credit After a Bankruptcy – It’s Easy, and Very Necessary!

Repair Credit After a Bankruptcy – It’s Easy, and Very Necessary!

Nearly all people who go through a bankruptcy are told by their lawyer that their credit report will take care of itself and there’s nothing they need to do about it–no credit repair, nothing. Rarely does that turn out to be the case. Most of the time, a bankruptcy will leave lingering items on your credit report for years and years. Many times creditors will continue to report on accounts that were included in a bankruptcy and this is absolutely not legal. Frequently, those creditors will just fail to update the accounts to show a zero balance. Again, not allowed.

As far as credit repair goes, fixing credit after a bankruptcy is just about the easiest scenario you could be in. The process is simple: you need to write credit dispute letters for everything you included in your bankruptcy. Why? There are two reasons: 1) often the creditor will not respond to the dispute since they have nothing to collect from you–this causes the account to be deleted; and 2) because most of the time the creditors are reporting these accounts incorrectly. The second reason is the reason that gives you the right to dispute the account. The first reason is the big benefit to you.

If you had to include a large number of accounts in your bankruptcy, then you will have quite a few credit repair letters to write. This can be a pain, but it is well worth your time. You could pay one of the thousands of credit repair companies, but if you look at what these companies really do compared to how much you will have to pay, you might feel a bit ripped off. Like anything, you have to look at your whole situation. Do you have 3 hours of time to save yourself 0 – 00? If so, you should look into doing self credit repair. Particularly in the case of a bankruptcy where it is a simple matter of mailing out one batch of credit dispute letters, self credit repair is really the wisest option–and

Credit Scoring and It’s Effect on you

Credit Scoring and It’s Effect on you

When you think about “credit score”, what do you think of first? Which aspects of “credit score” are important, which are essential, and which ones can you take or leave? You be the judge.

How do credit bureaus compute one’s credit scores?

A lot of credit reporting bureaus or agencies gathers information on the subject of the debtor’s credit history or files from reliable private and public sources. They also collect data from the creditors who extended the loan to the debtor.

Accordingly, the information is clustered into five sets or categories with the corresponding percentages which reflect the importance of each category in the final computation of scores, namely: (1) Owed Amount – 30%, (2) History of Payments – 30%, (3) Duration of Credit Record – 15%, (4) Nature or Kinds of Credit Currently in Use – 10%, and lastly (5) Latest Credit Inquiries – 10%.

Generally, these credit bureaus calculate the debtor’s credit score using a three figure number which range from 300 up to 850. The higher the credit score, the better chance of acquiring low interest rates for the loan being applied for and a better opening for wealth accumulation.

The industry of credit-scoring has been generating different opinions and wide-spread reactions to the public. The consumers fear that credit-based rating or scoring will pose a negative impact or unjust rating to them and will affect their economic standing and other financial transactions.

Some credit bureaus justify their purpose of gathering information and making credit rating or scoring. For them, their work is to help lending businesses formulate efficient economic decisions.

The information about “credit score” presented here will do one of two things: either it will reinforce what you know about “credit score” or it will teach you something new. Both are good outcomes.

Others create a distinction between the credit-based scores of insurance companies which predicts the loss of propensity and the credit scores which is simply to predict the worthiness of a certain person to pay.

A distinctive company should develop its own credit-base rating or scoring algorithm to serve better the consumers. Here are some of the strategies adopted in credit scoring:

1. Forming a Credit Assistance Group/Team – they are the quick response group that will assist consumers calling through toll-free numbers. The public would certainly like to know the effect of credit records to their application of loans, mortgage, employment and/or insurance transactions.

Also included to the team’s responsibility is the making of reports on the personal credit insurance of the consumers. This report will show the consumer’s variable score and the comparison with the aggregate scores

In addition, the team will consider previous credit records and the possible effect of extraordinary events which resulted to low scoring.

They will help the consumers by directing or referring them to the right people who will be of much help to them in taking good care of their credit problems. They will also help in correcting errors in the credit records of the concerned consumer.

2. Revising a New Method in Credit Scoring- this simplified method uses nine variables instead of the usual sixteen. Their algorithm will compute the credit scores by designating or assigning 100 as a foundation score. From these base score, they either add or minus making the range of score from 50 up to 250. The lower the score, the more desirable it is as credit scores.

3. For those consumers with no credit records or whose credit histories are lacking, they will create a program which will specifically cater to these groups of creditors to somehow uplift their credit ratings.

With the continued research and study on the needs of the consumers, these credit scoring bureaus will truly make a difference to the lending and/or insurance world.

Now you can understand why there’s a growing interest in “credit score”. When people start looking for more information about “credit score”, you’ll be in a position to meet their needs.

The author, Floyd Dorrance is a professional researcher of a variety of articles.

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Posted by Editor on Thursday, August 19, 2010 at 10:05 pm
Filed under Credit · Tagged with Credit, Effect, It's, Scoring

Mortgage Marketing Email Campaigns – It’s My Web

It’s My Web’s branded email templates carry the same look and feel as your mortgage website ensuring a coordinated, professional look for your clients every time. Another reason you’ll love It’s My Web.

Posted by Editor on Sunday, April 4, 2010 at 3:10 pm
Filed under Tools · Tagged with campaigns, Email, It's, Marketing, mortgage

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Filed under Tools · Tagged with Done, Email, It's, Marketing, Successful

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Understanding Your Credit Score and It’s Implications on Lending

Repair Credit After a Bankruptcy – It’s Easy, and Very Necessary!

Credit Scoring and It’s Effect on you

Mortgage Marketing Email Campaigns – It’s My Web

Successful Email Marketing – How It’s Done

Capture Mortgage Leads – It’s My Web

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