Credit Scoring and Consumers - Why Are Credit Scores Beneficial?

Credit Scoring and Consumers - Why Are Credit Scores Beneficial?

credit scores may seem like a mysterious number to consumers, but they are really just a basic mathematical formula to determine your credit risk. with hundreds of factors affecting your score, each credit choice you make changes your score. knowing your score can help you get more accurate loan quotes and better financial offers.

unlike a credit report, credit scores arent free. you can purchase the information from a reporting agency or you can go through a credit monitoring service. most credit monitoring companies will give you your score free as part of a trial offer.

evaluate your lending risk

do you know what type of credit you have? while most people answer with a good credit or bad credit, a number is a more valuable tool. a score of 670 or higher qualifies you for the best rates. lower numbers are divided into a series of categories, charging higher rates for lower scores. the national average consumers score is 676.

even with a low number, you can find credit. it is just a matter of how much you are willing to pay in interest charges. shopping lenders will also help you find reasonable rates.

more accurate quotes

with your credit score, you can get more accurate loan quotes. a number of lending sites provide rate quotes without accessing your credit report. however, you have to provide your credit standing. when you input an accurate number, you can know that the quote you receive is more precise.

for sites that divide credit by good, fair, or bad, use 650 as the bottom end of good. fair is usually in the 600s, while bad would count as 500 or lower.

better financial offers

you can also get better financial offers when you know your credit score. lenders specialize in different types of risk categories. so people with bad credit may find better rates with a subprime lender, rather than a traditional lender. the same is true for people with good credit.

knowing your credit score can help you better target your lender search. however, it isnt a bad idea to start by looking at offers from all types of lenders. that way you can see what is available to you. large down payments or cash assets can also offset your credit score, making you eligible for lower rates.

here are our recommended companies for afree copy of your creditreport and other credit rating resources.

carrie reeder is the owner of abc loanguide, an informational website about various types of loans.

article source: http://ezinearticles.com/?expert=carrie_reeder

Credit Report Scoring Errors - How to Write a Dispute Letter

discovering an error on your credit report can be disheartening, especially if you are applying for credit. however, you can write a dispute letter and get the issue resolved. the credit reporting agency is legally responsible for investigating errors, but you can also involve the informing party.

be specific with your problem

when you write your dispute letter, be as specific as you can about your problem. list the creditors name and contact information. also include a copy of the erroneous report. highlighting or circling the incorrect information will draw attention to it.

the more information you provide the credit reporting agency, the more legitimate your claim looks. reporting agencies dont have to look into frivolous claims. so be as clear and concise as you can.

dont forget to also check the other credit reporting agencies credit reports. you may find the same error and will have to write separate letters to each agency.

site sources and dates when possible

to help get your issue resolved faster, provide additional information that could be helpful. send copies of old bills or statements that are relevant. you can also include copies of correspondences you had with the company or legal documents, such as a bankruptcy discharge.

by providing additional information, you make it easier for the agency to investigate the dispute. with detailed information, they can get to the root of the problem faster.

keep copies of paperwork

for your own records, keep copies of all your paperwork. note dates that you sent out the letter, along with included information. this will help you keep the parties honest.

and when you do send copies, dont send the originals. you may need those later on, especially if there is a mix-up of some kind. if you have any phone conversations with the agency or creditor, also make a note of the persons name, date and time called.

while you are sending a dispute letter to the credit reporting agency, also send the letter to the informing source. many times these parties can act quicker than the agencies.

make sure to follow up your letter with a phone call after a few weeks. the sooner those errors get fixed, the better loan rates you will qualify for.

article source: http://ezinearticles.com/?expert=carrie_reeder

Effects of Credit Cards & Loans on Your Credit Report

effects of credit cards and loan accounts can be positive. for example, retail charge cards can be a good way to establish or improve your credit. because the card limits are generally low, you may pose little risk to the creditor. so, you may be approved with little or no credit history. using these cards responsibly may help establish your creditworthiness for more significant credit (such as a vehicle loan or a mortgage) in the future. unfortunately, the interest rate on charge cards is much higher than regular credit cards because of the higher risk involved. use these types of cards sparingly.

like retail charge cards, secured cards can be the first step toward repairing your credit history. with secured credit cards, you are required to deposit money with the issuer of the secured card that partially or completely covers the amount you may charge on your card. if you default on your card payments, the creditor may withdraw the money you have on deposit to repay the debt. in some cases, however, the card may be converted to an unsecured card if you make satisfactory payments for a specified length of time. your secured card will help you establish or improve your credit only if you make the payments in a timely manner. even though you have money on deposit with the card issuer to secure the debt, you must pay at least the monthly minimum to keep your credit history from looking even worse.

on the other hand, loans and credit cards can have a negativeimpact. first of all, applications for credit are reported to credit bureaus as an ?inquiry? and remain on your report for 24 months. lenders may become suspicious if they see numerous credit applications within a short period of time. fearing that you may become overextended on the amount of debt you can handle, they may deny you credit simply because youve applied for too much.

furthermore, late and missed payments will appear on your credit report. for each credit account you have, your credit report will contain a detailed history of your payment record over the last 12 to 24 months. derogatoryinformation may remain there for seven years or longer, depending on the type of notation. each time youre late making your credit card payment or miss a payment, youre undermining your credit history and weakening your chance to obtain loans in the future.

finally, all open accounts with no balances also appear on your credit report, even if you dont use them. because they increase your potential debt-to-income ratio, open but currently unused accounts can prevent you from obtaining new credit. to prevent this situation, get a copy of your credit report. if your report shows that you have cards you no longer use, call the issuing companies to cancel them.

these are just a few ways credit applications and accounts can affect your credit. to learn more, visit http://www.directlendingsolutions.com

article source: http://ezinearticles.com/?expert=chris_robbins

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