Thirty million people in the United States avail of credit lines and the majority
(if not all) are aware that financial scores or ratings are important figures to take note of when dealing with credit issues. Many however commit a few mistakes in attempting to increase financial scores. This article aims at explaining rating or scores and how to increase them.
What is?
A credit score is simply a person's or a business' financial rating. Credit figures are numerically represented from 350 to 850 and are indicative of an individual's financial activity. These figures are used by creditors to determine whether that particular person or business is a good credit-granting risk. The higher the financial rating the more likely it is that credit will be provided with a lower interest rate.
Boost Tips
There are several ways in which ratings or scores can be improved.
First, is by obtaining a copy of the financial statement or report. These reports contain in-depth financial history and are provided by any of the three main credit bureaus (Equifax, Experian and TransUnion). By regularly checking reports a person is aware of his or her financial activity and can verify the entries on the report or statement. In addition, credit scores may increase whenever an entry is inaccurate and is immediately reported and fixed. credit reports can be availed free of charge annually according to the Fair and Accurate Credit Transactions Act (FACT Act). However, online and mail requests can also be made.
A common fallacy about ratings or scores is that closing old accounts can help boost financial figures. Shutting down old accounts can shorten an individual's financial history making present balances appear larger to the lender. However, only a minimal number of points are taken whenever old finance profiles are closed.
Furthermore, paying bills on time and regularly cutting down debt are efficient ways to increase credit figures. Missed payments can decrease scores from 50 to 100 points. Lenders prefer larger gaps between the amount of card debts and credit limit.
Lastly, it is imperative to stay away from bankruptcy. Apart from being very difficult to fix and bringing disastrous effects to a profile, bankruptcy incidents deduct 200 points from credit scores. Financial stains like these stay on credit reports for ten years as well.
Having a rating or score falling below 620 can ultimately render loan applications difficult and more expensive. Worst of all, lower scores are not given any recognition at all most of the time. Taking these helpful advices therefore can prevent you from loan denials and/or higher interest rates on credits.