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3 Simple Ways to Use Online Credit Reports to Improve Your Personal Credit

By Jessica Deets
Reviewed by Aaron Vaughn

Like most Americans you may be skeptical of why an unseen online agency would want to “help” you by checking your credit score for free. I mean, aren't they just out there to get your money? The truth is, these credit checks can really help you, especially if you are trying to improve your credit.

First, by checking your credit online, you avoid “dings,” which lower your score. Many consumers are afraid to investigate their credit because they think their score might drop, putting them in even worse shape. This isn't true with online credit reports. Thus, without dinging your credit, online sources allow you to check out your score, for better or worse.

Alternately, if you have been denied credit within the last 30 days, you can ask the credit bureau for a free report that won't ding your credit. You do have to use a local reporting agency, which can take more time than using an online source. Most people go in person to the agency to request the report and then pick it up. Both of these steps seem quite tedious when compared to online credit checks.

Another benefit of online credit reports is the ability to see both good and bad credit you have on your report from the privacy of your own personal computer. No nosy bankers trying to get your a credit card or auto loan. Without sales pressure, you are less likely to get into more debt and lower your credit score.

Lastly, you can verify the accuracy of your credit. The online report will be taken from each of the three national credit bureaus. Occasionally you will see accounts that you dispute, which gives you the opportunity to contact the bureau. To do this, you must write a letter explaining exactly what is incorrect or disputed. The agency must investigate. When they contact the creditor, he has 14 days to respond or the item is deleted off your credit. A little known secret is that if the item is less than $500 or older than one year, most creditors won't bother responding, whether your dispute is accurate or not.

Disputing bad credit is the most direct way you can improve your credit. When your bad credit is reversed your credit score will increase. Most importantly, after your score goes up you have the right to demand that your updated credit report be sent to all those who have denied you credit in the last six months. Good news!

So, if you wonder how good, or bad, your credit score is, don't be afraid to check it out online. The report is excellent information that arms you with power to change and improve your credit.

Most people with bad credit don't know much about how it gets that way or how to fix it. Your knowing both is a good start to improving your credit.

Your FICO Score and Applying for a Loan

By Joseph Kenny

Have you wondered how loan and mortgage companies decide whether or not to lend you money when you apply for a loan?

For nearly all, the decision is based on one version or another of a 'credit score' based on your credit report. The most commonly used credit scoring 'device' is the FICO - software developed by Fair Isaac and Company to evaluate credit histories.

When you make an application for a mortgage loan, the finance company or bank makes an inquiry to a credit reporting agency. The credit reporting agency takes the information given them by the finance company and compiles a report based on information in its own records and other information that's a matter of public record.

That information is not only compiled, it's fed into a software program that uses a series of algorithms to estimate the likelihood that you'll pay the loan back. It makes that estimation by comparing information about you with a profile created by compiling the 'ideal borrower'. The closer your information tallies with the 'ideal' profile, the higher your credit score.

Among the things that the FICO software evaluates when coming up with a credit score are:

• the length of time you've been in your current job
• the length of time you've lived at your current address
• how long you've had credit of any kind
• how many credit cards and loans you have
• whether you've ever made any late payments (or made any in the past four years) on credit accounts
• f you've paid off any loans in full
• if you've ever had an account referred to a collection agency
• how much debt you carry, and
• how much credit you have available to you

Those are only a few of the factors that affect your credit score.

But just how much does your credit score affect your chances of getting the mortgage you want?

According to many financial experts, while your credit score is a large factor in determining whether or not to grant a loan or mortgage to you, banks and finance companies take many factors into account.

Most have their own underwriting rules and scoring systems of which the FICO is only a part. Those may include your employment history, the local job market and many other things. Based on all of those factors, a company may decide to extend a mortgage to you despite a low credit rating - or refuse you credit even if your credit rating is high.

One common belief is that a low credit score is forever. Nothing could be further from the truth. Your credit score is very fluid - it's meant to represent a picture of your current circumstances and ability to repay a loan that's extended to you.

For that reason, new information added to your credit report will affect your credit score - and the further in the past that credit mistakes are, the less they matter.

In some cases, it takes as little as 4-6 months of on time payments to bring your credit score up high enough to qualify you for a new loan or mortgage. A new job, a raise in salary, or paying down one or two credit cards could make the difference between a rejection and getting the mortgage that you want.

Joseph Kenny is the webmaster of the loan information sites http://www.selectloans.co.uk/ and also http://www.ukpersonalloanstore.co.uk.

How To Improve Your Credit Score

By Jake Truman

In today's world, having good credit is an absolute must. Credit is no longer for simply buying items today and paying for them later. Now, credit is used to validate who you are as a person and your worth. Credit scores are utilized daily in life. By following some simple rules, you can keep your credit score at its highest points.

Understand that your credit score is a living and breathing animal. It is ever changing and has its up days and down days. Perhaps your credit score is 600 right now. Tomorrow it could be 595 and next week 615. The smallest detail can change your score for better or worse.

Utilization

This is the big killer for most people. Utilization basically means the amount of your total credit ability you are actually using. Here is an example breakdown:

You have (5) credit cards with a total combined credit line of $10,000. You currently owe $3,000. You are using $3,000 of your $10,000 maximum thus your utilization is 30%.

The goal is to keep your utilization under 30%. A high utilization can destroy your credit score. In fact, I have personally seen a high utilization cost a person about 100 points. One hundred points is huge.

To keep your utilization low, you want to do two things.

1. The first is pretty obvious--Don't use too much of your credit.

2. Next, work to increase your credit lines. Bug your creditors constantly for credit line increases. Some allow you to request credit increases every so often and some are automatic. Always work to increase your credit lines.

Inquiries

There are two types of credit inquiries--Soft and Hard. Soft inquiries don't affect your credit rating at all. Soft inquiries are generally created when you view your own credit report and other minor requests. A hard inquiry can hurt your credit score. When you apply for credit, a hard inquiry is usually created.

Typically one or two inquiries in the past six months won't harm your score, but more than this will start taking your score down. Also some potential creditors will look at how many inquiries you have in the last six to twelve months. If you have more than one or two, you might be denied credit.

The moral here is to only apply for credit when you are pretty sure of being approved and when you need it for personal or credit building reasons.

Accuracy

The last thing to do is make sure all your credit data is correct. Most credit reports have errors on them and you can indeed have information changed and even removed. To find out how, visit CreditLiberty.com, which is a credit repair information website.

If you have false late payments, incorrect credit lines, incorrect credit balances, incorrect account types or payment history mistakes, your credit score will be reduced. You owe it to yourself to check your credit report with Experian, Equifax and Trans Union very often.

At the very least, check your credit report twice per year and always check it before you apply for credit. In fact, you should check it well in advance because correcting information on your credit report normally takes about 30 days.

Copyright 2005 JakeTruman.com

Credit Scoring For Beginners

By Frank Bruno

When it comes right down to it, we are just a number. There used to be a time when people applying for a loan would be judged by the Three C's; namely, Credit, Collateral, and Character. Yes, there was a time that you could get a loan just because the banker liked you.

Times have changed. With the age of technology, everything has become impersonal, including the lending business. The Three C's have been reduced to one: Credit Score. Your best chances of obtaining a loan, then, depend on your understanding of this vaunted number.

Your credit report is a report card of how well you manage your debts. Like your grades in school, the higher your score, the better your chances of success.

Scores range from 300 to 800, with most credit reports scoring in the range of 480 to 760. There are three major credit reporting agencies. They are Equifax, Experian, and Trans Union. Each of these three credit bureaus has its own proprietary formula for calculating your credit score.

Similar to being judged at a figure skating competition, each bureau has its own interpretation of your "performance" as a borrower. Factors that go into calculating a credit score include your payment history, the quantity of your open accounts, the ratio between your credit limits and outstanding balances, and lender inquiries, to name a few.

How does your score work in terms of getting a mortgage? Different mortgage companies have different ways of interpreting your score. Commonly, for example, you'll find lenders referring to the "middle score." Upon looking at your credit reports, you might find, hypothetically, that Experian gave you a score of 630, TransUnion 610, and Equifax 634.

In this case, your "middle score" is 630, and would be the basis on which your creditworthiness is judged. In essence, the high and low scores would be "thrown out" and disregarded. Note that not all lenders work this way. Some will take only your lowest score, some will take only your highest, and some might consider a combination or average of the three.

The important thing to remember is that your score is only a number, a common denominator to which everyone can relate. Just like the weather, everyone can relate in terms of the degree of temperature. However, the interpretation is relative. For example, 80 degrees might be considered hot to one person, and it might seem cold to another. Similarly, a score of 630 might be considered "good credit" by some lenders and "bad credit by others.

With all these different interpretations and variables, one thing is for absolute certain. Having the highest credit score possible is your very best bet. The ramifications of having a high credit score are enormous. With a high score, you can qualify for lower interest rates, lower down payment requirements, and faster loan processing times among other numerous benefits. In other words, it can NEVER work against you to have the highest possible credit score. With it, you can achieve savings of time and money that translates into thousands of dollars per year, every year.

Frank Bruno has spent the last 3 years assisting hundreds of clients in saving thousands of dollars in Interest rates by teaching them unique techniques on how to quickly and dramatically raise their credit scores. For more information, please visit his website http://www.CreditScoreBooster.com

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