Posts Tagged ‘credit score’

1. What is Credit Scoring?
A credit score is designed to measure the risk of default of borrowers. It takes account various factors of a person’s financial history. The most popular form of credit scoring is the FICO score, in which majority of lenders use to determine your financial risk. This is used by the three major credit bureaus: TransUnion, Experian, and Equifax.

2. Why is Credit Scoring Important?
Credit Scoring is one of the most significant factors when it comes to getting a mortgage. The issue is that many times information on a credit report doesn’t truly reflect the credit worthiness of potential borrowers.

3. Will my FICO score drop if I apply for new credit? If it does, it probably won’t drop much. If you apply for several credit cards within a short period of time, multiple inquiries will appear on your report. Looking for new credit can equate with higher risk, but most credit scores are not affected by multiple inquiries from auto, mortgage or student loan lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on the credit score.

4. How to improve a FICO score:
Generally, people with high FICO scores consistently:
–Pay bills on time.
–Keep balances low on credit cards and other revolving credit products.
–Apply for and open new credit accounts only as needed.
Also, here are some good credit management practices that can help to raise your FICO score over time.
–Re-establish your credit history if you have had problems. Opening new accounts responsibly and paying them on time will raise your FICO score over the long term.
–Check your own credit reports regularly, before applying for new credit, to be sure they are accurate and up-to-date. As long as you order your credit reports through an organization authorized to provide credit reports to consumers, such as myFICO, your own inquiries will not affect your FICO score.

5. Top 5 factors driving scores down:
–Accounts which are currently showing past due
–Derogatory trade lines (recent lates on accounts)
–High balances on unsecured debt (credit cards)
–Unpaid and recent public record information
–Lack of open active trade

6. Top 5 Ways to increase scores
Negotiate with creditors. When an account has only 1 late and it is recent- tell creditor how long account has been open in good standing and request a one-time courtesy removal.
Negotiate with collection agencies. When a settlement is offered by agency, before paying off, counter the offer by requesting removal of account upon payment.
Paying off or paying down revolving debt. Try to get balance below 50% of the credit limit. Transferring balances is sometimes possible when little or no cash is on hand.
Student Loan Late Payments. Many times student loans are in deferment and being reported late due to paperwork not being supplied to the lender. Contact lender and supply proof of student status and request removal of late.
Installment Loans. In most cases, don’t waste time paying off or down these loans as they have little impact on the scores.

Experian 800-222-4930 http://www.experian.com/dispute
Equifax 800-203-7843 http://www.credit.equifax.com
TransUnion 800-916-8800 http://www.tuc.com
http://www.optoutprescreen.com (pre-approved & triggers) or 888-567-8688
http://www.gethuman.com (avoid automated calls)


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