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Credit Score Guide |
This
credit
score guide will reveal how to
improve your credit score using ten
simple tips that are set out below.
Introduction...
Credit
scoring is information about you and your financial
history that helps credit providers decide whether
to let you borrow money, and if so, how much.
Everyone has more than one credit score because
almost every credit provider has their own in-house
method of rating a customer’s financial history.
Credit bureau Experian reckons more than a thousand
credit scoring systems are operating across the US.
Nevertheless, each of them assesses the same basic
data - it’s just the way the system rates that data
that changes from creditor to creditor.
That’s why some credit providers accept you as a
customer while other’s don’t on the same financial
information.
Your credit report is a history of how you handle
debts and bills. Missing payments will lower your
credit score, but the longer your history without
negative details, the better.
If you can’t get credit, think twice before
approaching a credit repair clinic. These clinics
cannot legally do anything for you that you can’t do
yourself - for free.
Here are 10 proven tips for improving your credit
rating legally. Over time, they will work and are no
different from the services of a credit repair
clinic, except for they cost you nothing.
Tip 1
- Check your credit report
Check out
www.annualcreditreport.com - the only authorized
online site that can provide a free credit report.
Federal law states you can obtain a free credit
report from each of the three main bureaus -
TransUnion, Experian and Equifax - once every 12
months.
If you prefer, call 877-322-8228 or mail a completed
Annual Credit Report Request Form to Annual Credit
Report Request Service, PO Box 105281, Atlanta GA
30348-5281.
Tip 2 -
Look for inaccuracies
Compare the financial payment information, credit
limits and account details with your credit and bank
statements.
If you think the data contains errors, write to the
credit bureau highlighting the inaccuracies with an
explanation of why you think the details are wrong.
Include a copies of any documents that confirm what
you say.
The credit reporting company must look at your
complaint within 30 days. If they have made a
mistake, they must correct the inaccurate
information.
Tip 3 -
Add missing accounts
If you have credit accounts, like store cards, that
do not show on your credit file and you have trouble
getting credit because you have no financial
history, ask for their inclusion on your profile.
Tip 4 -
Pay your bills on time
This is probably the most important single action
anyone can take to rebuild their credit profile.
Make sure you pay the bills that show on your credit
profile on time and in full. Set up automatic bank
payments to pay on time and make sure the account
has enough money to cover the bills as a returned
payment will lead to a negative remark on your
credit profile.
Tip 5 -
Don’t spend up to your credit limit
Spending right up to your credit limit is frowned on
by credit providers. The credit scoring programs
compare debt with disposable income, and constantly
living near the edge will lower your credit score.
Tip 6 -
Deal with debt
If paying bills on time is the most important step
to repairing credit, ignoring debt is the worst
thing you can do.
Credit providers will help someone facing up to debt
problems, but ignoring payments and trying to borrow
to get out of debt are likely to make matters worse.
Tip 7 -
How long information stays on your report
Credit indicators stay on your credit report for
different lengths of time, depending on what type of
information they show.
Missed credit payments and most public record items
are visible for seven years, with the exception of
Chapter 7, 11 and 12 bankruptcies, which remain for
10 years.
Unpaid tax liens remain up to 10 years.
Credit searches stay for up to two years.
If you have bad credit, work to repair your profile
within these time limits.
Tip 8 -
Mix and match your credit
Too many credit accounts may work against your
credit score, but having several different types of
credit shows a lender that you are a responsible
borrower who can manage your borrowing.
Tip 9 -
Don’t keep applying for credit
Credit searches stay on your profile for two years.
Too many inquiries from credit providers will mark
down your score. Although credit providers do not
post the result of any applications, they do see
other lenders have searched your file.
Tip 10 -
Look carefully at credit repair
The main thing to consider about credit repair is
not all lenders report your payment history to a
credit bureau, so taking out payday loans or prepaid
cards can be a waste of time and money.
If you want to build a financial history, check out
the lender updates your credit report with repayment
details.
Some
credit score myths unmasked...
Some borrowers looking for borrowing misunderstand
the finer points of a credit score, and think that
they can fool the system.
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• If you are serious about building your
credit profile, here are some of the myths
revealed for the mistakes they are: |
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• Paying off a bad debt does not remove the
black mark from your credit record - it
still stays there for up to seven years |
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• As long as one partner has a good credit
record, their husband or wife’s credit score
doesn’t matter - Couples don’t have a joint
credit score, but if borrowing depends on a
joint income, one partner’s poor credit will
drag down their credit score. |
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• Paying cash all the time gives someone a
good credit score - paying cash may be a
good way to handle your money, but credit
providers don’t like the habit because they
can’t assess your financial history. |
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• Credit bureaus label someone a bad credit
risk - credit bureaus compile financial
data. Credit providers interpret that data
to help them make lending decisions |
Lastly,
don’t ever succumb to the temptation to tell lies or
cover up details about your financial history. If
credit provider find out, your name could go on a
fraud list and make obtaining credit difficult for a
long time.
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