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Credit Report Score: Getting The Score That You Need |
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Life is full of ups and downs and many problems can arise at any stage of life. It is possible that you can fall sick or your spouse can get involved in a car accident. Such adversities can be the cause of your falling behind on some of your payments. These problems can have a serious effect on your credit report score, which can go tumbling down to the dreaded 620 levels, because you had not been able to make your payments on time. If, at this stage, you apply for a mortgage, you will not qualify for the loan, as your credit report score would simply not be good enough. Individual circumstances vary from person to person but for the credit score to tumble to that level, typically there is need for 90-day delinquencies, charge-offs, repossessions, or a bankruptcy to have occurred. You could also reach a low credit score by using your credit cards heavily, even if you're paying the minimum amount that's due. The credit score cannot drop to 620 or below merely because of a minor delinquency a few years back. A credit report score can predict whether you'll be able to live up to meeting your obligations for the repayment of loans that you might take on today. Before approving a loan, the lender requests for a copy of your credit report from the credit bureau and studies your prior history. As such it is essential to maintain a good and sound credit report score so that the lender has no hesitation to grant you the loan that you desire. However, your credit rating could get damaged due to certain unavoidable factors in which case you should know how to fix, improve and protect your credit report score. The best way to improve your credit report score and take it from a lowly 620 to a desirable 680 is to keep paying your bills on time. Depending upon some factors, it is possible to turn a poor score to a good score by making regular payments for at least one year. Is having a good score enough? A solid credit report score by itself may not be enough to qualify for credit. If the loan is over $100,000, a loan officer will visit you to satisfy himself. The loan can be approved within 24 hours, if everything is found in order, without having to submit papers to a loan committee or going through any kind of formalities. Similarly, lenders try to ascertain the character of the owner as well as the company's ability to repay, when a small business desires to have a loan. Both business and personal credit histories are analyzed in such a case. Lenders base their decisions regarding interest rates and whether or not collateral will be required on a range of scores. Let us take the cases of Consumer A and Consumer B to illustrate how credit report score actually works. Consumer A: A few years ago, he ran into some financial problems but since then he has been paying his loans on time, his credit card debts are up-to-date, and he does not push his credit lines to the max. He hasn't been applying for credit left, right, and center and his lines have been in place for a long time. All these factors would make him an acceptable risk level to most credit grantors in spite of the earlier problems that might have raised concerns. Consumer B: He did not have any serious credit problems in the past but his present is disturbing as he has acquired all of his credit recently, and he's using it to the limit, even over the limit, while actively seeking more credit. There is a foreboding of future trouble as one of his credit cards shows a late payment. Obviously, Consumer A would have a better credit report score and present a lesser risk than Consumer B and would thus be the winner in the credit scoring game. It's best to have a mix of revolving accounts and installment loans as having different types of credit can positively impact your credit report score. |
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