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"Your Credit"

Articles:

How is your credit calculated?

The Fair Credit Reporting Act

What is a good credit score?

How to fix common credit report problems.

How to raise your credit score.

Where to get your credit report online.

What is a Good Credit Score?

     Because every lender is different, it is difficult to pinpoint what exactly is considered to be a good or bad credit score. Each lender has a certain standard and level of risk that they will accept when dealing with credit applications. One thing that is universal, however, is that the higher the credit score, the better chance you will have of being approved with better interest rates. This includes mortgages, auto loans and credit cards. Many people do not realize this, but credit scores even effect the cost of insurance premiums.

     In general, any credit score of 700 or better is considered to be good credit. In the next category, which ranges from 600 to 700, lenders will take a closer look at the applicant’s credit file when considering an application. A credit score below 600 is considered to be a higher risk loan and is, therefore, often limited in credit options.

     Depending on which category you are in, you may find that you either have no trouble in getting credit or perhaps you find that you can get credit with higher interest rates. The higher scores are most needed when applying for a mortgage and car loan, but credit cards are more forgiving when it comes to those with damaged credit.

     Because each lender is different, you can always ask what credit score they require for consideration in a home loan. The best way to approach this is to simply ask if they offer a program for individuals with a credit score of your range. If they say ‘yes,’ you are set. If the reply is negative, simply ask what type of credit score they recommend having before proceeding with an application for credit. Most lenders will say that a credit score of 600 or better is needed for a mortgage loan, but some mortgage companies may be willing to extend credit to those with a slightly lower credit score.

     If you already have a good credit score, you probably do not need an education in credit repair. However, if you have a history of late or missed payments, a bankruptcy, repossession or foreclosure in your credit file, then you will need to know how to get that credit score back up so that lenders will give your application serious consideration.

     The first step to increasing your credit score is to check your credit reports for inaccuracies and dispute them immediately. Review your credit reports and score every six months and always pay your bills on time. If you need to rebuild your credit, start with a secured credit card or one that caters to those with past credit problems. As you establish a good payment history, your credit score will begin to improve. In addition, avoid maxing out your credit cards and try to keep the balance below 50% of your available credit. Pay your debts down as much as possible and avoid submitting credit applications excessively. By following these steps, you will begin to notice additional credit options.