subject: Credit Capacity, Credibility and Collateral [print this page] Credit Capacity, Credibility and Collateral
Combine these four "C's", and you get the inner workings of a credit score. So what exactly is a credit score? It is a numerical value based on a person's credit worth, and how likely one will repay a loan. However, do not think a credit score is the same as a credit report because there is a difference.
A credit report is exactly that, a report. It is not a numeric score. Congressed passed a law stating that every consumer is entitled to receive one free credit report each year from the national credit bureaus. This report can be obtained via annualcreditreport.com, but you will need to pay for your actual score.
A credit score is based on several different factors; one's credit history, amount of outstanding debt and the type of credit you use. A typical score ranges between 300- 850. A higher credit score equals a better deal from lenders, landlords, creditors and insurers. This means lower car and home insurance premiums, lower interest rates, deposit waivers from property rentals and utility companies, even a better service plan from cell phone companies.
There are five sure ways to ruin your credit score. Max out your credit cards, late payments, debt settlements, foreclosure and bankruptcy. Many people do not know their actual credit score, let alone know how to improve it. In order to improve your score you need to review your credit report. Once you identify problems, then you can set out to repair any damages. There are some easy steps you can implement today that will improve your credit score.
* Stop using credit cards
* get current on delinquent accounts
* do not apply for additional credit cards or loans
* keep accounts with balances open
* keep balance low
* call creditors you might qualify for hardship program
* pay off your debt
* get professional help
* be patient. - making changes and improvements take time
Know your credit score, and you will be prepared next time you buy a new car, home or even apply for a job. That's right prospective employers can run credit checks. It is important to note that credit scores do not take into account occupation, age or marital status. Scores just reflect your credit capacity, credibility and collateral.
