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Credit Report Score > Credit Report Score: Paying Your Bills On Time Can Make A Difference
Credit Report Score: Paying Your Bills On Time Can Make A Difference |
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A credit report score is a pointer to your
ability to pay your bills on time and lenders use it to make their decisions regarding approval of a loan and the interest rate, if the loan is given. The three major credit bureaus, Equifax, Experian and Trans Union, compile the credit report score. If you are in the habit of paying your bills on time, you will have a high score and vice versa. Whereas borrowers with a high score pay lower rates, those with lower scores have to pay higher interest rates and may not get any credit at all. Fair Isaac, in San Rafael, Calif., has constructed the most prevalent scoring system. The credit report score can be obtained from a few different sources on payment of a fee. If your score is high, falling in the excellent category of lenders, you need not do anything, as you would already be high up in the list of the lenders for the best terms for a loan. The range of credit report score is from 300 to 850 and the cutoff points for what is acceptable varies from one lender to the other. As a general rule, the categories are as follows: Scores above 730--Excellent Scores between 700 and 729--Good Scores between 670 and 699--Needs a closer look Scores between 585 and 669 - Higher risk Scores below 585--No credit or limited credit You should try to improve your score by paying any delinquent bills and lowering your total credit card debt, if your score is good or toward the upper end of the closer-look range. Start from the top The first step in debt reduction should be to eliminate those cards that are closest to the credit limit and all efforts should be made to make all future payments on time. However, you won't be able to raise your credit report score by closing unused credit cards. The important criterion is how you use the credit you've got, rather than the amount you have available. Some lenders might prefer your reduction of the amount of open credit that is available with you. You will also not be able to raise your credit report score by paying off one delinquent bill if you have many other credit blemishes on your report. What is important for raising your score is to show your determination to turn over a new leaf by becoming creditworthy over a period of time. If your cards are maxed out or nearly so, making all your minimum payments won't serve much purpose. The assessing criterion is how much of your available credit you've used. If your other cards are maxed out, opening new debt-free cards won't help. Your average debt might look lower as compared to your total available credit but new credit lines are not considered as good as old ones. If you don't use credit cards, you lose points, as lenders want to see that you can charge purchases and repay on time. It helps to have some balances Lenders prefer people who carry balances, because they pay interest on their accounts although the general feeling is that credit report score cannot be improved by carrying balances forward from month to month, as opposed to paying each bill in full. You should make all inquiries within a 14-day period, if you're comparison-shopping for a mortgage or auto loan. Those inquiries will be clubbed together and counted as a single inquiry. If the inquiries are spread out and registered separately, make it appear as if you are craving for credit, which will lower your credit report score. If you are shopping for a mortgage and have a middle order credit report score, you should apply at a conventional bank and not at a sub prime bank that specializes in mortgages for people with poorer credit as those loans are expensive. You might qualify for lower rates at conventional banks. |
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