Bad Credit Secured Loans - Are They Worth the Risk?

In this time of financial crisis and economic difficulty more and more people are struggling to keep up with their monthly obligations. As a result individuals end up falling behind on their car payments, mortgage, utilities and are forced to look for alternative lending solutions to get them through their money problems.

In this article we'll talk about the advantages and disadvantages of bad credit secured loans and whether or not they are a viable option for you.

First off it's important to understand that secured loans will require collateral on the part of the borrrower to the lender in the event that for whatever reason you are unable to pay back the amount borrowed, the lender can sell the collateral or material property to settle the debt.

While their are lenders you can apply to for these kind of loans it's important to consider whether or not the value of the purchase you are trying to make is worth the possibility of losing your collateral assets. Many people are faced with the threat of losing their home and because they are so far behind in their payments may not be able to refinance their home with a traditional loan.

As a result of the damage done to their credit, their FICO score may suffer a severe blow making it difficult to get any kind of financial help, even with a co-signer. This is where bad credit secured loans can be of benefit to the borrower IF they are sure that they can pay back the loan without losing the collateral they've pledged to obtain it.

Depending on the size of the debt, the collateral may consist of automobiles, other homes or real estate as well as business property. The obvious downside to these types of loans is that you run the risk of losing your collateral if the debt cannot be satisfies according to the terms of the agreement.

Another bit of information to consider is that depending on the amount of inquiries made on behalf of the borrower by the lender, future opportunities to obtain traditional secured loans from lending institutions will be very difficult. Traditional lenders look at the amount of times an inquiry is made for secured and unsecured loans and if you have more than three inquiries within the space of year this could severely impact your FICO score and negatively affect your credit rating.

Student Credit Cards - Use Them, Don't Abuse Them

Once you start college, you'll enter the adult-world in many areas, including the world of credit. Today, companies offer credit cards specifically designed for you, the college student. And while these cards give you a chance to access and manage a line of credit, they also have potential downfalls.

The biggest potential downfall is, of course, the danger of falling into debt problems. If you graduate with a sky-high balance that you are unable to pay back, you'll be in danger of receiving a low credit score. And having bad credit is worse than having no credit at all.

That said, having a student credit card can be extremely beneficial. When used properly, it can serve as a tool to help build up your credit before you even finish school. Here's a look at student credit cards and how they work.

Different from the Rest

Student credit cards are designed for individuals that are just starting out in the credit world. Most of them come with a lower limit than other credit cards. Some of them require a parent or other adult to co-sign. Many let you sign up even if you do not have a regular income.

Student credit cards also often come with benefits that are geared toward the college lifestyle. They might include a rewards program based on your GPA or let you earn points when you purchase gas. Others will offer incentives such as going to an MTV event or airline tickets.

How to Use Them

Student credit cards can be a great item to have in your wallet when used properly. The first step toward wise management is to figure out what the card will be used for. You may decide to buy books and school supplies with it. Or you might want to hold on to it for emergency purposes. Once you establish guidelines on how you'll use it, try to stick to them.

When you do use the card, remember that you are actually taking out a loan. Whatever money you spend with the card will have to be paid back. So before you swipe the card, it's important to make sure you know how you'll repay the credit company. When you receive a statement at the end of the month, try to pay at least the minimum amount due. Whenever possible, pay off the entire balance right away.

What to Watch For

Many news headlines tell woes of college students that run up credit card debt. To avoid this scenario, read the fine print carefully before signing up. If you're worried about falling into debt problems, look for a card that comes with a low credit limit. If you end up with a high balance on one card, do not apply for another one until you pay off the entire amount due on the first one.

Use your student credit card wisely and you'll be rewarded in many ways. You'll have access to credit in case of an emergency, and a helpful financial tool for purchasing books and other school-related gear. When you graduate, you'll already have an established credit history. And you'll be on your way to a bright future in the credit department.

How to Build Business Credit For Your New Business

If you recently started a business then you won't have any credit established in the company's business name. The bulk of your business was built upon your personal credit score and savings. To create a professional business without using your funds this article will provide you tips to show you how to build business credit for new owners like you.

The first order of business is to make sure that you have all of your legal documents completed and set up. You will need a tax identification number, business license, physical address, telephone and fax number, business checking account and business plan. You may already have these items. But these are essential to getting business credit.

The next item you will need is a trade reference. At least five trade references are needed to build your business credit. These trade references will report how well you pay your bills to the major business credit reporting agency named Dun and Bradstreet. You can apply for credit cards for items that your company will need. Office supplies, gas cards, cell phone accounts, retail supplies and vehicle loans are some of the items that might be needed. Most small business owners might start out with secured credit cards, but can eventually transition to unsecured financing.

In personal credit ratings your FICO score determines what type of loans and interest rates you can attain. In business credit it is called a Paydex score. This score has a range between zero and one hundred. A score between 90 and 100 is deemed as excellent. A score between 75 and 89 is considered good. And scores from 70 and under are considered bad. You will need to protect your business credit score just as you would your own personal credit rating. It will make or break your business. These scores are determined and calculated by Dun and Bradstreet. How well you pay your bills on time is also a deciding factor. If you don't pay on time your Paydex score will suffer.

Business credit is needed by new owners as well as existing ones. It provides additional lines of cash to help provide working capital for equipment, inventory, or payroll. You will want to get all of your legal documents completed before attempting to start the process. After getting everything done you will need to acquire five trade references and a bank reference to report how often you pay your bills to raise your Paydex score. As your credit improves you will be able to get higher loan amounts as your business grows. One thing to remember is to not take on any loans or credit that cannot be repaid. It will take a long time to correct and repair and will negatively impact your business.

An Annual FICO Score "Check-Up" Can Help Maintain Better Financial Health

A low FICO score can keep you from obtaining a loan for a house or car, affect the rate you'll pay on insurance and it can even keep you from being able to rent a house or apartment.

Regardless of whether you've recently been denied credit or have never missed a credit card payment it's important that you obtain a copy of your credit report and FICO score at least once a year. And, if you're planning on applying for a loan for a house or a car or any other major purchase, you'll want to get an updated copy at least three months in advance so that you have time to repair any errors or negative reports. Free credit reports can be obtained by contacting any of the three major credit bureaus and, if you're working to repair a bad credit score, it might be a good idea to get signed up with a credit monitoring service.

FICO scores range from 400 to over 800 points. A score near 400 will probably exclude you from getting a credit card (though a secured credit card option might still be available), a car loan or a mortgage. With a score in the high 500s to the low 600s, you'll probably qualify for credit but the rate you'll pay will be higher and, you'll likely have to pay additional fees. If you've managed your credit properly and have a score in the low 700s or up, you'll be able to qualify for most loans, including the best balance transfer, miles and rewards credit cards. You'll also pay the lowest rates and have fewer fees attached.

In this day and age of identity theft and credit card fraud, making a FICO score and credit report "check-up" an annual event is a little like getting an annual physical from your doctor, it's a fairly painless event that can make a big difference in your overall financial health and well being.

How to Improve Your FICO Score

How to improve your FICO score is one of the greatest unsolved mysteries of the modern age. Everybody who has ever applied for credit has a credit report and a credit score, known as the FICO score. (FICO is an acronym for "Fair Isaac Corporation", named after the guys who developed the credit scoring system we use today.) But how is it computed? How do you lower it? How do you raise it?

Common sense would dictate that if you make your payments on time, your FICO score goes up. The lower your credit score, the more likely you are to be denied credit or given a loan with a higher interest rate if you were to apply for a loan. The higher your credit score, the more likely you will be granted credit and given a good interest rate. If you are delinquent on your payments, your credit score goes down. But there is much more to it. You could be paying your bills on time for years and your credit score may still be low. Or you could have a couple of late payments on your credit report and still have a good credit score.

How does the FICO score work? The FICO score can range from 300 to 850.

Here are some general tips on how to improve your credit score:

Never max out your credit cards. The FICO score takes into account the percentage of available credit you have vs. your total credit line.

Pay your credit card balances in full every month. If that is not possible, then at least pay more than the minimum payment.

Do not close your old credit accounts. The FICO score rewards you for having a longer credit history.

Cosign with someone else who has good credit. Every time the other person uses his or her good credit, you will be rewarded too!

Don't apply for too many different cards or loans at once. Your FICO score also takes into account the number of recent inquiries into your credit report by creditors. The more inquiries, the lower your FICO score.

Dispute negative or inaccurate items on your credit report. If you have any negative items on your credit report or any inaccurate items that could be adversely affecting your FICO score, then you can contact the respective creditors to dispute the information and have them update your credit report with either the correct information or have them delete the disputed information altogether.

Don't file for bankruptcy. This will cause a definite drop in your FICO score.

Don't let your house go into foreclosure. This will also cause a definite drop in your FICO score.

Don't let creditors get a court-ordered judgment against you. Judgments are part of the public record and can go on your credit report, causing your FICO score to fall. Try to resolve any financial issues with your creditors without them suing you in court for it.

Don't rely on credit counselors. Credit counselors can help you consolidate your debt and get a lower interest rate, however the fact that you are using a credit counselor will show up on your credit report and can thus affect your FICO score.

DO pay off your collection items. If you pay off an item that has been referred to collections, creditors may be willing to overlook the collection item, being that you have demonstrated that you are back on track and have brought the collection account current.
This list is by no means exhaustive. There are numerous tips on how to improve your FICO score. If you have less than perfect credit, it will take time to improve it. Unfortunately, FICO scores are not always updated in real-time, because most creditors only report to the credit bureaus (the companies that maintain your credit report) once a month. However, with discipline, given time, your credit score can be salvaged and in fact, you can raise your FICO score to impressive levels.

Buy a Car With Bad Credit - 4 Tips on Getting Approved

Financing a new or used car with poor credit is feasible. However, there are ways to boost your approval chances and possibly acquire a reasonable interest rate. Do not enter the car buying process blindly. Individuals with good credit have many options. On the other hand, if your credit is bad, you must search for a good deal. Here are four tips to help you obtain a car loan with bad credit.

What is Your FICO Score?

FICO scores range from 300 to 850. The lower the score, the higher the interest rate received on an auto loan. Having a low credit score does not remove the possibility of getting a new or used car loan. However, a low credit rating will greatly affect the interest rate on these loans.

Before applying for an auto loan, obtain an online copy of your credit report and score. If your score is below 600, consider postponing buying a car. Instead, devote six months to improving your score.

Maintain Steady Employment

Along with credit report rating, auto loan lenders require applicants to have steady employment. Often times, an applicants must earn at least $1200 a month. Steady employment usually consists of having the same employer for 90 days. Thus, avoid changing employers every two to three months. To prove employment, auto loan lenders may request copies of recent paycheck stubs.

Get Pre-Approved with a Sub Prime Auto Lender

Before browsing the selection of vehicles at car dealerships, attempt to get approved with an online sub prime lender. These lenders help many people with bad credit obtain financing. There lending requirements are flexible; however, sub prime auto loans have higher interest rates. If eager to buy a new car, accept the higher rate, and then refinance at a later date.

Apply with a Co-Borrower

The easiest way to get approve for an auto loan with bad credit is to apply with a co-borrower. If the person co-signing the loan has excellent credit, this may justify a better rate. Of course, there are risks to using a co-signer. If the primary borrower becomes incapable of making regular monthly payments, the co-signer becomes responsible for the loan.

Discover Your Equifax Range Of Possible Scores For Credit - Credit Score Inquires Don't Hurt You

Consumers with scores below about 620 will pay significantly higher rates and fees to obtain a loan. At a time when financial literacy is a major public policy issue, the educational factor alone warrants a price most favorable to consumers. Consumers will also be entitled to receive from a CRA one free credit report in a 12-month period. The CRA will be required to provide the report within 15 days of the consumer's requesting it. Consumers' ability to obtain scores easily and at a fair price will further all three of these objectives.

Consumers should not be concerned about inquiries they make, such as ordering a credit report. Self inquiries don't affect the credit score. Consumer reporting agencies and other companies sometimes use an estimated score to illustrate a consumer's general level of credit risk. Consumers should pay their bills on time every month. Remember that 35% of the credit score is comprised of payment history. The Equifax range of possible scores for credit is somewhat flexible.

Consumers with scores in the 800 range get reason codes just as consumers with scores in the 500 range. The reason codes may be used in describing to the consumer the reason for adverse action.

Lenders will use your credit score to determine if you are likely to pay your bills and also help them place you with the appropriate repayment plan. For example, if you have claimed bankruptcy in the past, they might place you at a significantly higher interest rate. Lenders studied the relationship between credit scores and mortgage delinquencies. There was a definite relationship. Lenders use FICO scores to predict what kind of borrower you'll be. Scores range from 300 to 850; the higher, the better.

Lender or credit card companies set multiple cutoff points. For example, if you are above 800, you might be offered the Platinum card. Lenders realize that many people occasionally pay late. Therefore, being late with a single payment is typically not as harmful as being late with two or more consecutive payments. This will be reflected in the Equifax range of possible scores for credit that you need to obtain your loan. Lenders may consider employment, income, expenses, assets and other factors when making credit decisions. Also, different lenders may weigh some of these factors more heavily than other lenders.

Lenders review credit scores along with the additional applicant information to decide whether they want to extend credit to borrowers who represent a particular level of risk. Typically, credit points range from 330 to 830.

Without a sufficient credit score, you either can't get loans or you are paying higher interest rates for the loan you have. We have found that NFC(TM)/American Credit(TM) is the best choice for improving your credit report and obtaining a loan at the lowest possible rate. At what point can you expect to pay a higher interest rate? Check with your Equifax range of possible scores for credit to obtain your loan.

It does not mean that you cannot get a loan. Experts say that a person with a low credit score , say, below 600, will likely receive mortgage interests rates that are nearly 3% higher than someone with a score above 700.

Easy Steps to Protect Your FICO Score Credit Rating

A FICO score credit rating is made up of numbers based on an analysis of a person's credit files to represent that person's credit worthiness. Any lenders such as mortgage lenders, car lenders, credit card lenders and so on have the ability to check your credit to analyze whether you are a credit risk or not. The number in which they come up with is based on the files in your credit report from three credit reports that come from Experian, Equifax and TransUnion. They will check to see what exactly is in your credit report and determine whether you have good or bad credit.

Your FICO score credit rating is not limited to only banks. Wireless phone service will sometimes also check your credit as well as apartment companies and so on. There are now many organizations that base your ability to pay on your credit score. There are also companies or people checking into your credit history that you may not know about. It is important to know what is going on with your credit report and to monitor it regularly.

When your FICO score credit rating is checked, lenders are able to see the number that is given to you as a rating. This number represents your credit score and naturally the higher the better. You need to check your credit report on a regular basis to make sure there is no activity going on that is not yours. There are people out there who will steal your identity and with that, they steal your credit and your money. You will want to check your files at least once per year to protect yourself and your identity.

Be careful whom you give your personal information too. Protect your personal information and be sure you check your FICO score rating credit reports regularly. There are scams and hackers in the world today who will steal your personal information and run up charges and destroy your credit and in some cases your family and home life. If you suspect any illegal activity with your identity or your personal information, be sure to report it to the authorities and you credit companies immediately. Do not wait to see if it will go away. It will only give them more time to destroy what you have built for yourself and your family. If you are not sure what to do talk to the local police department in your area and they can help you and talk to a lawyer.

Bad Credit Loans Help Facilitate Borrowing Money In Bad Times

Bad times often occur for people when they are least prepared. They hit them the worst at that time. Bad credit is one such nightmare for the borrowers when they are in need of money for their requirements. For such situations, there are bad credit loans that the borrowers can easily take up for their needs.

These loans help the borrowers at a time when they are suffering from a bad credit history. This would mean that the borrower has a credit score lower than 580 in the FICO credit report. The reason for this may be anything like arrears, defaults, missed repayments or CCJs. But the borrower can recuperate with the needs through the money that is borrowed.

Borrowers can fulfill any types of personal needs that arise for them like wedding expenses, travel expenses, medical procedures, educational expenses, home improvement, debt consolidation etc. The borrowers also get a chance to improve their credit score with timely repayment of these loans.

Secured and unsecured form of these loans is available to the borrowers. They can make the choice between the loans according to the needs. Smaller needs can be dealt with the help of the unsecured form of these loans which do not require any assets to be pledged. Money available lies in the range of £1000-£25000 and is borrowed for a term of 6 months to 10 years. Through the secured form of these loans, the borrowers can take up an amount in the range of £5000-£75000 for a term of 5-25 years. An asset has to be pledged as collateral for these loans by the borrowers.

The rates of interest are slightly higher for these loans with respect to other loans. This is due to the low credit score that the borrowers have. Money may be borrowed at lower rates if the borrowers try to research online and get money for their needs.

Bad credit loans provide an opportunity to people with low credit score that they get the money for their needs without any hassle and can fulfill their needs easily.

What is the FICO Credit Rating Scale?

If you just recently received your credit score, and you want to know where you stand, I wanted to show you how you can rate yourself among most of the Americans out there. Every person out there obviously has a unique credit score, and if you're looking to rate yourself among the others, here's where you most likely stand with your credit range score.

800+ -- This is the best that you can get. You're going to get the top of the line loan, and banks won't have any problem lending out to you.

700-799 -- The 700 range is still fantastic. You're not going to be frowned upon, but then again, if you're striving to be the best, you still have to hit the 800s. Regardless, if your score is anywhere in the 700s, you have nothing to worry about.

675 - 699 -- When you start to reach the 600s, you're starting to get to the borderline when it comes down to interest rates, and other things. Sure, you will still get approved for a lot of credit related items, but you will have to most likely either pay fees, or look into a higher interest rate.

620 - 675 - This isn't the OK category anymore, it's the danger category. A lot of banks and lenders are going to be very hesitant on lending to you. In fact, you're going to find that it's going to be fairly hard to get a loan.

Anything below 620 is going to be hard for you. Hopefully this chart will give you a better idea on what everything is all about, when it comes to your score.

Avoid These Common Mortgage Mistakes

Going in Blind
Do you know your credit score? Before you even think about applying for a mortgage, you should order your credit report and FICO score. You can get your credit report for free once a year, or you can pay for it if you need to follow it more often. Getting this information six to eight months ahead of when you apply should give you enough time to improve your score or fix any errors on the report.

Confusing the PRE
Are you PREapproved or PREqualified? It is better to be preapproved when you want to start looking at homes since it means you have got the thumbs up from a lender. It is not a for sure promise, but it does assure that you have at least been through the first set of requirements in getting a loan.

Cart Before the Horse
Have you already found your perfect dream home? The mortgage process can time some time and real estate brokers will be more willing to work with you if you are already preapproved. Do not even start to look at homes until you have secured the financing with preapproval.

Getting in Deep
Although lenders have become more cautious, in general they are still willing to lend more than many home owners should spend for a home. Some new homeowners are surprised by the increase in expenses of owning vs renting. Insurance, utilities, repairs all add to the monthly budget and should be accounted for in determining the upper end of price range for house shopping.

Be a smart with your money and avoid these mistakes.

Bankruptcy Credit Score - Your Life After Bankruptcy

Are you afraid of how a bankruptcy credit score will affect your buying power? No doubt about it, bankruptcy may eliminate debt collectors, the fees and penalty rates assessed against default payments, threats of legal action, and legal actions. However, the consequences of filing bankruptcy are severe. And the smoke and mirrors that come with a bankruptcy credit score is nothing to sneeze at.

Now, I don't plan to make a mountain out of a molehill. But if you have filed for bankruptcy, you must consider what it will take to rebuild your credit. And on top of that, you must use your credit wisely, and at the same time provide a good explanation for the bankruptcy in your credit file.

To make a long story short, you need to understand how your credit life will work after bankruptcy. Pay close attention as I take a no holes barred approach to how filing bankruptcy can affect your credit.

Listen up...

In a nutshell, bankruptcies will be listed on your credit report in the public records section. This mark remains on a credit report for at least 10 years. Understand this...your bankruptcy credit score will be at least 100 point lower than it was before you filed.

What this means for you is lenders and creditors can increase your interest rates or even decline future credit because of the bankruptcy as a result of your low credit score. But, don't worry. There are other lenders who will extend credit you regardless of the fact that you've filed for bankruptcy. In short these lenders know that you cannot file bankruptcy again for eight years. So the likelihood of you paying them on time is great, and more importantly, they can charge you higher interest rates.

And here's something else I want to say...the better your credit score before filing bankruptcy, the more your credit score will drop due to the bankruptcy. But, on the other hand, if your credit was bad before filing for bankruptcy, the bankruptcy will not cause your credit score to drop that much.

A good rule of thumb is to prepare a statement that describes valid reasons for seeking bankruptcy protection. Surprisingly enough creditors and other business entities may be willing to do business with individuals who provide valid reasons for their bankruptcy. This statement is not a part of the 100 word written statement that consumers are allowed to add to their credit files. Instead, this is a verbal statement that you should consider making to creditor that will pull your credit report before completing business and credit transactions.

Without a doubt, your bankruptcy credit score will play a large role in lenders decisions to offer you credit. But, take the road less traveled and recognize what you are getting yourself into. After all...you don't want to apply for credit that will cause you to lose your shirt.

Fix Bad Credit Report - 3 Golden Rules For Fast Credit Repair

Is your credit score far from perfect? Are you planning on a major purchase or loan but fear being rejected by creditors? Don't worry. More than 30 million Americans are in the same boat. According to the general myth, there is one sure way to fix bad credit report-time, financial effort, careful budget planning and discipline. This formula has proven to bring a gradual credit score increase. The paradox here lies in the fact that most of us need that nice house, luxury car, personal or business loan NOW, not later. Luckily, there are some less known secrets and shortcuts that can help you raise your credit in a shorter period of time.

Here are 3 rules you have to keep in mind if you want a fast credit repair:

1 Where are you?Where do you have to be?

The fist thing you have to figure out is where do you stand on the credit scale and where do you have to be. The Fico score places you somewhere on the credit scale between 300 and 850. This three digit number that the credit bureaus assign to you determines if you will get approved for a loan and if you will have to pay thousand of dollars in high interest. And not only that -the score is increasingly used by employers, landlords, insurers in order to evaluate applicants. Once you know where you stand, you have to figure out where you need to be. Different lenders have different criteria. A 700 score can be enough for one creditor to give you the most favorable loan. Yet it might be insufficient score for another lender. Do you need to raise your score with 10, 20, 50, 100, 200 points? This is vital information if you want to come up with a viable course of action.

2 The newer the debt, the bigger the influence on credit score.

In general the most recent credit history has the biggest influence on the overall FICO score. The older the negative item, the less impact it has. Credit is time sensitive and you have to keep that in mind when you embark on your credit repair program. Taking care of current late payments or bringing down current credit card balances to a healthy balance/ credit ratio will produce dramatic change in your score.

3 "paid " vs "deleted" status.

Contrary to what many people think, a paid collection is still considered a negative item on your credit report. In other words, it still impacts your score negatively. "Deleted"collection on the other hand will instantly raise your score with more than 30 points. How do you delete a collection? You simply negotiate with the collection agency and promise to pay the settlement amount ONLY if they delete the item from your record. In a similar fashion, you can send a "goodwill" letter to your creditor explaining the circumstances surrounding your late payment and ask them to remove it from your account. A little diplomacy can really work miracles with your credit score.

These are just some of the things you have to keep in mind if you want to fix bad credit report. There are many other credit secrets that can help you boost your credit in no time. You'll be surprised to find out how easy credit repair is once you start thinking outside the box.

Avoid Unauthorized Requests of Your Credit Report

Identity theft and credit fraud is the largest form of white collar crime going on today. An individual who gets your personal information can ruin a good part of your life when they steal your good name and destroy your credit. One of the best ways to limit the chance of someone getting your identity is to put a stop to unauthorized requests of your credit report. Many credit solicitation companies pull your credit report prior to sending you an offer. This will not only leave you open to identity theft, but too many requests on your report can lower your overall score. There are a few things you must do to stop this unwanted practice.

1. Review all your credit card agreements. In these agreements you will find that the credit card issuer states that they will sell your name and information to outside companies. You must call a specific number on the agreement to have your name and information withheld. If you do not have a copy of their agreement, visit their website it will be posted there.

2. Contact your bank and/or other financial institutions. They will also have a clause in their financial agreements stating they will sell your information. Again, you will need to contact the right department to have your name removed from their selling list.

3. Be careful whom you release your personal information to when signing up for clubs and newsletters. Most of these companies will sell your information to anyone because this generates a lot of income for their company.

4. Finally, contact your credit bureaus. You can contact your credit reporting agencies and follow their specific instructions on how to block your credit report from unauthorized usage. This should put a halt to unsolicited offers of credit.

Following these simple steps will help you ensure that your credit is protected, your identity safe and your credit score remains stable.

Are Credit Cards for Fair Credit Getting Better?

At their inception credit cards were reserved almost exclusively for the financially elite. They were originally meant to extend the buying power of those who did not want to bother handling that pesky cash or the indignity of having to write a check. Look at us now, McDonalds reported last year that "plastic" will soon over-take cash transactions at their windows. Who-da thunk it?

However, convenience does come at a price. Visa, based in San Francisco, benefits as shoppers worldwide are beginning to rely more on credit and debit cards instead of cash and cheques to make payments and they get a "taste" (to be said in your best Tony Soprano voice) of every transaction. Guess who gets a cut, your local bank that issued the card to you. Guess who pays these fees, the retailer and ultimately the consumer.

Visa announced, they are preparing for their first IPO (initial public offering of stock) reports say that Visa may raise up to $US18.8 billion in the largest US initial public offering. Traders are astounded that in these times of unsteady financial markets and a global credit crunch that any financial based company could pull this off. But investors are optimistic and eagerly waiting as consumers trade mortgages for plastic. The bright spot in the plastic invasion is good ole' capitalism and competition.

The previously mentioned financial elite are not the only people who enjoy great credit card offers now. A large percentage of Americans have dropped in credit levels based on an up and down economy and the banking fiasco. These consumers are a large percentage of the banks income. So, instead of turning consumers away with the same awful credit cards of yester-year they are building better credit cards for fair credit consumers. Having a bump or bruise on your credit in the past meant you were only offered "secured" credit cards with outrageous rates and fees on your on money!

Now days a god portion of credit card consumers with fair credit can enjoy credit cards offering 11.9% interest rates, 0% balance transfers and no annual fees. Credit cards for fair credit card holders have certainly come a long way. Of coarse, they come with tricky little features that allow the credit card companies to return to their obnoxious roots if you pay late. All in all though, if are looking for a good credit card while you work on improving your credit rating they are out there if you look around.

A foot note to the IPO that Visa is preparing for; In 2006 when the 2nd largest credit card company in the world MasterCard did their IPO shares rose $7, or 18%, to $46 on the New York Stock Exchange almost immediately. The shares were priced at $39 each, and the initial public offering raised $2.4 billion. They are now trading at $195.00 at the time of this article. Investors are watching this trade closely.

FICO Credit Score History

Do you know Fair Isaac? The Fair Isaac Company is the creator of the FICO score: that little three digit number that controls your ability to get a decent rate on your credit cards, mortgage loan, or car loan. It also impacts your ability to get car insurance, home insurance, and even to get a job. How can that be?

The Fair Isaac Company was founded in 1956 to provide data to help businesses make smarter decisions. In 1995 Fannie Mae and Freddie Mac gave the FICO score an important credibility boost when they recommended that lenders use the FICO score to qualify mortgage loan applicants. Imagine having no idea why your loan was disapproved except that something called a FICO score was not good enough. It was not until recently that the Fair Isaac Company was even willing to share the major categories that they use to calculate your score. The exact formula that is used to calculate your credit score is still a closely guarded secret. However, thanks to Internet lenders who in early 2000 published some of the FICO guidelines in response to public outcry over the secrecy, Congress finally made it a law that people should have access to their scores.

Over 65% of lenders now use the FICO scores to make sure that they will be able to get back the money that they lend. If it is even slightly possible that you will pay late or default on your loan those lenders will raise your interest rates or even deny you credit. In the next series of articles I will cover the five factors that affect your credit score: Payment History, Amounts Owed, Length of Credit History, New Credit, and Types of Credit.

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Instant Online FICO Score Credit Rating

Your FICO score is the same as your credit score. It ranges from 300 -850, the higher the FICO score the better. This means that a higher FICO score makes your financial reputation appear less risky to banks, resulting in you higher chances of lower interest on your loans. This rating is most frequently used when clients apply to a bank for a mortgage. Having a higher credit rating will allow you to receive better interest rates and terms on your loan.

An average FICO score is from 700 to 720, if you are within the range then more banks would approve your loan. The computation of your score is based on your payment history, current amount of debt, length of financial history, number of consumer credit cards, and whether you have defaulted on any previous debts. As mentioned a previously, the range is from 300 to 850, and anything below 600 is considered to be a bad credit history and scores higher than 600 are usually viewed as a good credit line.

Because the Internet is a place of endless possibilities, you can now receive your FICO score through several different websites. This is excellent news to anyone who is curious about their own credit history, especially if you suspect you may need to to improve your financial reputation. All you need to do is make a request from an online credit bureau to receive your credit report. This will give you the chance to look over the contents, and check for any errors, fraudulent activity such as identity theft, and out of date information.

Your Credit Rating and Credit History (Beacon and FICO Score) - Applying For a Mortgage

This article covers the topic of our personal credit rating and credit history. Credit rating plays a very large role in determining eligibility for securing new credit in addition to the terms and options available. As such, it is important to understand what information the credit reporting agencies use in order to come up our credit rating and credit score so that we can do all that we can to ensure our credit score is as always as high as it can be.

Using credit and carrying debt is a normal part of our day to day lives for many of us. Credit offers an element of convenience as well as the ability to purchase goods today that we may not be able to pay for in full. However, we may be able to pay for an item over time and would not mind paying a premium (i.e. interest rate) for the benefit of enjoyment and use of the item today (e.g. house, car, furniture, electronics, etc.). The use of credit though is important to understand as when used responsibly we will start to build and establish a good credit history and credit rating. Conversely however, if credit is misused and if we become delinquent with our credit, our credit history will show an irresponsible use of credit and therefore will be reflected with a poor (i.e. low) credit rating. The goal over time is to demonstrate that we have had access to a reasonable amount of credit, used that credit responsibly over time, and have also paid back the credit as agreed over time.

During the application process for new credit (e.g. credit card, car loan, mortgage), lenders (i.e. banks) will review your credit report and credit score to check how you have managed your debts in the past. The idea here being that how you have used and managed your credit in the past will be a good indication of how you manage your debts in the future. A credit report contains information such as, previous and current trade lines (i.e. accounts), credit limits, credit balances, payments over time, and if payments have been on-time or late.

If you have not had any credit in your own name before, it is recommended to apply for a form of credit so that you can start to establish a good credit history as having no history can be an obstacle in getting and being approved for new credit. You may need to start small and slow with a low limit as a bank may be apprehensive to start you off with a high available limit when you have not had any credit before. So start small, use the credit each month and then also pay it off in full each month. Over time the institution will likely be comfortable with starting to increase your limit slowly. One other important point to note is that if you have a number of credit cards and find that you are not using some, it is recommended to permanently cancel these. Keep about two to three mainstream credit cards that make the most sense (e.g. accepted the most places, provide the best rewards or insurance coverage, have the lowest interest rate). Canceling extra credit cards helps as potential access to too much credit can work against you when looking for new credit, in addition to the risk of lost, theft, and fraud.

If you think you have had a "blip" in your credit history try not worry about it. What you think may have been a "blip", may not have been. However, it is recommended to review your credit report each year just to make sure everything is reporting to it correctly. Examples of potential "blips" that can be hurting your credit score may include: late payments, not making the minimum payment required, going over your limit if even by $1.00, an outstanding collection, etc. If you have a "blip" on your credit report it is highly recommended to correct it as soon as possible as until it is rectified it can severely negatively impact both your credit score and your ability to secure new credit. So, if you have a problem in your credit report you will need to consider how much it is worth to you to fight and or ignore the problem vs. simply fixing it right away (e.g. an outstanding collection you do not want to pay). Also, all information, good and bad, is kept as part of our credit report for seven (7) years before it falls off. As such it is best not to have negative information report to our bureau in the first place but if it does, try to minimize it and resolve it as soon as possible.

One final note is to treat all credit carefully and plan any purchase where you will use credit carefully. Any lending institution will not want total outstanding debt and monthly payment obligations to exceed a specified amount, largely based on household income. So before taking on new credit think out into the future on any other credit you may be needing or want to apply for as taking on credit today could mean you may not be able to be approved down the road for another form of credit (e.g. get a car loan today that may create to large of an monthly obligation to also be approved for the mortgage you want in 3-6 months from now).

Meet and consult with an Accredited Mortgage Professional (AMP) regarding your credit report as we can always be a good resource and starting point to provide the information and help needed.

New Qualifications For Buying a Home - FHA Loan Limits Revamped For 2009

One of the official duties of the new president was to ensure the FHA loan limits would change. With the fall of Fannie Mae and Freddie Mac it has been essential to try and re-stimulate the economy. The stimulus bill has allowed for Fannie Mae and Freddie Mac to guarantee loans at new limits. It has also changed how the FHA loan program works. Three things have recently changed regarding the FHA loan limits. The first is the loan amount which can be awarded to the borrower. The second change is to the FICO score, and lastly the down payment has been modified.

In 73 counties the Federal Housing Administration is allowing for mortgages of $729,000. There are also loans awarded for more than $271,050 in more than 600 counties around the United States. The new limits are being assessed state by state. While the limits mentioned here are the new limits, depending on the state you live in you might not find much has changed. The new limit change occurred to help families in a high cost housing market. The higher cost housing market has been suffering because no one can afford the homes being sold under regular private mortgages.

The government and FHA felt the limits needed to be raised in order to get the economy back on track via these high cost markets. Among the changes to the limit totals is the loan to value. FHA loans through Freddie Mac and Fannie Mae can be 125 percent loan to value in the high cost markets to ensure a sale. This 125 percent loan to value is good for 2009, after which time the current market will be reassessed. Home buyers looking for an FHA loan will need to speak with the available lenders in their area to determine the loan limit they will be awarded. The loan limit will then help the buyer find a home in their price range.

Added to the monetary limits which have changed on FHA loans are the FICO score changes. Prior to 2009 a borrower needed 580 for their FICO score. In April 2009 this changed to 620. The lenders negotiated with FHA to increase the score due to the risk they felt 580 posed.

The next option FHA modified was the down payment required. To obtain an FHA loan one needs to have at least a 5 percent down payment. Before 2009 the down payment required was 3 percent. The change is not too difficult given the various grant programs available. The down payment requirement is different than the 125 percent loan to value we spoke of above. The 125 loan to value is only available in certain areas, and within special circumstances. For a normal FHA loan 5 percent of the purchase price is needed. This provides a 95 percent loan to value for an FHA loan. Borrowers need to understand the FHA loan limits as well as the qualifications regarding the loans in order to apply successfully for the mortgage.

Simple Credit Score Increasing Tips (Pt 1)

Your credit score is nothing more than a number that approximates how likely you are to be able to pay back your debts. It takes a number of financial factors into account, from how well you've paid back the debt you currently have to what type of credit you've already used before. Having a good credit score is necessary these days to acquire any large scale loan that you require (from a car loan to private student loans to a down payment on a house). A great credit score will help you out even further, as the better your credit history, the lower the APR you can expect to get on those loans.

Unfortunately, a lot of people have very low credit scores and they don't even know it. People with bad credit tend to not want to even look at their credit score due to a mixture of guilt and fear. Still, it's unlikely that you'll be able to start repairing your credit if you can't even bring yourself to see exactly how bad things are.

The first step to getting your credit back on track is knowing what your credit is in the first place by checking your credit report. Everyone is entitled to a free annual credit report by going to annualcreditreport.com and selecting one of their free services. A credit report will outline exactly what you owe, to whom you owe these amounts, whether the accounts are in good standing, what problems poor accounts might have, your most recent payments, and the most recent inquiries made by creditors to your account.

In addition to reading your credit report, it's also a good idea to check out your credit score. You credit score is determined by the following factors:

- 35% is based on your payment history. - 30% is based on how much you owe. - 15% is based on the length of your credit history. - 10% is based on new credit. - 10% is based on the types of credit used.

From this breakdown, we can figure out a couple of ways to increase our score and repair our credit.

The biggest bulk of your credit is based on your payment history and how much you owe relatively to how much you can borrow (ie; your credit card balance relative to your credit card limit). These two factors determine a full 65% of your credit score, so it's important to get them under control immediately. For starters, it's important that you begin to make all of your payments on time. If you already have late or delinquent payments, there really isn't anything you can do about those except make sure you don't accrue any more. Making all your payments on time is one of the single most important steps you can take to establish positive credit. While it can be easy to lose track of the time and miss payments here and there, it's very simple to set up an auto-pay system where your bills automatically deduct from your account.

Fixing a Credit Score - 3 Secrets That Helped Others Raise Credit Scores Fast

No matter whether your credit score is severely damaged or needs just a little "cosmetic" help, fixing credit score is always a good idea. The 3 digit FICO determines whether you'll get approved for a favorable mortgage or auto loan. But the importance of your credit score goes beyond shopping. All types of creditors, employers, landlords and insurers are pulling your credit file in order to decide the fate of your application. The growing significance of your FICO makes having a good credit a simple necessity.

Here are 3 popular myths about credit repair which prevent most people from ever trying to raise credit score.

Myth # 1 Credit repair takes a long time.

You've probably heard it a million times before-it takes just one wrong step to damage a good credit report, yet it takes years to repair it. Not always true! There are certain items in your credit report (bankruptcy chapter 7, foreclosure, repossession) that cannot be changed. You have to wait for the duration of the punishment period (10 years for chapter 7 bankruptcy, 7 years for the other items) in order to clear such accounts from your records. However, every other negative factor in your report can be deleted (collection, legal judgment, late payment, credit inquiry, loan default etc) or positively altered (balance/limit ratio, length of credit history etc). Such changes can bring increase in your credit score within months, weeks and sometimes days (example-the rapid Rescore strategy)

Myth # 2 Credit repair requires financial effort.

The mainstream credit advisers say that the path to a debt free life requires financial sacrifice and certain lifestyle changes. In other words-buckle up and start saving every possible penny in order to pay off your debt. In reality, paying off your debt in full is not necessary. In certain cases it can actually damage your report and lower your FICO. Let's say you have a collection that is more than 2 years old. Paying off that collection will upgrade the account status to current. The bad debt (although now paid) will continue to influence your score adversely. And since the day of last activity has now changed, the collection will stay on your report for additional 7 years. Examples like that show that financial effort is not always necessary. What you should do is settle for 20 % or less of the amount that you actually owe (collections are still making profit out of you) and then promise to pay only if the agency removes the collection from your credit report. When it comes to fixing credit score-do it the smart way, not the hard way.

Myth # 3 Only the credit experts know the loopholes in the credit system.

Anybody can be a credit expert. All you need is knowledge and understanding of how the credit system works. How is your FICO calculated? What are the most detrimental accounts in your credit report? How to dispute mistakes on your report using the Rapid Rescore strategy? How to ask for validation of debt? How to use the provisions of the Fair Credit Reporting Act and the Fair Debt Collection Practices Act? How to delete negative items from your record? In order to outsmart the system, you have to know how it works.

Fixing credit score is not that hard. Credit tricks and little known secrets will take you to the desired destination faster than any long term approach to credit repair. Once you start thinking outside the box, you'll be surprised to find how easy credit repair actually is.

Estimating Your Credit Score - Tips to Help You Determine Your FICO Score

Before applying for a loan many borrowers get nervous and wonder if they will get approved for financing. Knowing your credit score can eliminate this stress but credit scores change daily so how can you estimate your credit score right now?

The most important factor in your credit profile is paying your bills on time, if you have no 30 day late payment on reporting on your credit accounts that would be the most ideal situation for a high credit score. Most times borrowers with credit scores over 700 almost never will show a 30 day late on credit accounts. Keep in mind that one 30 day late payment either on a credit card or home loan can drop your credit score 50-100 points. It will take 6-12 months for your score to return back to the level where it was at before the late payment. 60,90 and 120 late payments make the situation worse and will take longer to recover from.

Balance to credit limit ratio is another big deciding factor in your credit score. If you have many accounts maxed out at the limit then you can expect a drop in your credit score of up to 100 points. The ideal ratio is to have a balance at 45% of the credit limit. This is considered by many to be the ideal balance to limit ratio. If your credit accounts are maxed out then you can always ask the creditor for a credit line increase, this will drop the ratio down and bump up your credit score.

The number of credit inquiries will also have a negative affect on your credit score, to many inquiries and you score begins to drop. If you are shopping for a home or car only allow your credit report to be pulled 3 times. Excessive credit inquiries can have a drastic affect on your credit score so use common sense when shopping for things that require credit to be pulled.

If you have good payment history with low balance/limit ratios and have no had excessive credit inquiries you can be safe to estimate your credit score at 680-700, you can subtract 50 points for every 30 day late and another 50 points for every credit card that is maxed out. Although there are other factors the three listed above will make up the biggest portion of your credit score and it is safe to estimate your credit score based of of them.

FICO Score Scale

FICO scores are used by most financing and credit institutions that measure a person's creditworthiness without the tedious requirement process of looking into the individual's income history and employment status. FICO scores are used by credit card providers and banks to determine his/her credit limits, interest rates and even paying period.

Calculating one's FICO scores is a closely guarded secret, companies consider several factors prior to interpreting one's FICO score. Usually, finance firms and banks take into account as much as five credit accounts that have been in use for at least a year in order to determine one's capacity to be given credit to and his/her ability to pay for loans or credits. Pre-determined weighted factors are then used to calculate one?s FICO scores which are then checked against the given FICO score scale.

A person's calculated FICO score may range on a scale from approximately 300 to 850. The higher one's FICO score is the better his /her standing to avail of loans or credits. The median FICO score is around 720, FICO scores higher than 725 are considered good while those which are below 600 are considered bad. FICO scores that range from 750 to 850 are excellent scores which tells of his/her creditworthiness and would enable the individual to be granted credit or loans almost immediately by finance firms or banks. 660 to 749 are good FICO scores that would entitle the individual to credits or loans with certain conditions and with limits as to the amount of money they can use from these institutions. Fair FICO scores of 620 to 659 are regarded with much consideration since these are not good digits based on the FICO score scale. Poorer scores that range from 350 to 619, may be sufficient for finance firms to deny the applicants credit or loans.

Also, it is not uncommon for an individual to have several FICO scores depending on the credit reporting agency that calculates his/her FICO score. This is because each agency considers different parts of one?s credit history based on the access that they have.

The Importance of Your Credit Score Chart

The importance of a good credit rating cannot be overstated. Lending practices and the credit card companies with the new changes in our laws are able to charge higher interest rates to those borrowers who have lower credit scores. It is imperative for all consumers who have debt and who wish to be able to preserve their good name for future borrowing or financing needs, to know their credit score.

A credit score chart can show you where your rating number falls within the ranges that are used by the financial institutions. There are limits to each category such as "excellent" "very good" or "good" and your score will determine the classification you are given as a borrower or how a credit card company may assess you as a potential financial risk.

The credit score chart that is easily found on the internet sites will show you where you fall within the ranges and there are things that you can do to increase your score over time: thus lowering interest rates that you will qualify for on some loan products.

The main factor in determining your credit rating will be the on-time payment history. If you have had many late payments, this will greatly lower your score and hurt your credit history. It is possible to repair bad histories of payment, but it can take some time to completely reverse the damage.

Another way to improve the credit score chart position you hold is to reduce the amount that you owe in total. Your overall debt amount should be a smaller percentage of your total debt capacity to really serve your good credit history. If your credit limits and borrowing limits are never close to being maxed out, that is a positive mark on your credit history and helps boost your credit score chart standing.

It is worth the time each year to get a copy of your credit report from each of the reporting agencies. They will give you one free report within each year and that can help you keep track of how your credit is looking to those who make inquiries. Since each reporting bureau will give one report a year, you may wish to request one every 4 months in order to see how your credit looks for the whole year.

How To Receive a Free Credit Report FICO Score Online

A big part of the financial aspect of your life is to know your FICO score. This rating is essential, especially when you want to be accepted for loans and mortgages. There are lots of things that maybe a factor in the deterrence of your FICO score, like errors out of your hands, or other outdated information, with these kinds of possibilities out there, you should keep track of your credit information all the time.

Your past really matters when it comes to the computation of your FICO score, because the way you pay your bills before, the number of credit cards you have acquired, and the way you manage your debts counts. The better management given to your past and current debts will give you a better financial reputation which make you more reputable.

Generally, FICO scores range between 300 and 850, with 850 representing the best possible score, and 350 signifying the worst possible bad credit rating The average American has a score of around 720-740, which is seen as a satisfactory rating and will be rewarded with lower interest rates and better terms.

You should know where you belong in the range to determine how much loan can you get and how much interest is possible for you. The more educated you get about your money, the better you can manage your money.Do not let your credit go down, because if you do it would be hard to put it up. Better track your finances to have a high FICO score. Always remember a high score means that you are a credible loaner.

Surefire Ways to Boost Your Credit Scores

Even though the method that each credit reporting agency uses to calculate your credit score is different, the way you approach improving your report will be somewhat the same. It's the urgency in which you do this that will determine how fast you can raise your credit score.

Once you receive your credit report and know the areas that are affecting your credit score the most you can create a plan of attack to clean these areas up and get the best results possible in the least amount of time.

Using this method to repair your credit report and improve your credit score will make each resulting step easier to accomplish.

Once you have cleaned up your report and scores to the point that you are able to secure a small loan with a local bank and then making the payments on that loan, on time, you are creating positive history. It is that history that will give future lenders the confidence to trust you as a safe client.

This will allow you to get better interest rates. The lower rates result in lower payments which in turn ensures you can manage them and not miss any payments, thereby improving your credit score even more.

While you should start your credit rebuilding plan with this method, the momentum created with it is going to improve your score quickly. You also need to remember that there are several other areas on your credit reports that will affect your score and they all need to be addressed at some stage if you are to achieve the highest score possible.

Building Credit For Beginners

Student credit card proves helpful for students in the school and in college to build their own credit records. It teaches you to take care of financial needs. This credit card serves many advantages such as you are able to pay your bills on time, shop for school supplies and buy food items individually. This type of card offers the convenience of spending on your own. Parents too feel relaxed as their children take on the responsibility in coping with their academic expenses apart from personal expenses.

When you get such a credit card, you tend to build credit personally. You get a chance to focus more on studies as your card looks after paying all the monthly bills. A clean credit history means you may go ahead to apply for personal or car loans. This card gives students the opportunity to rent residences or apartments soon after college.

How It Builds Credit?

To build credit with such a credit card, stay within the limit of credit while purchasing school items, clothing and food. Additionally, make the bill payments on time to escape the defaulter's list, which may harm your credit scores. Parents equally need to be sure that their children use these credit cards for the intended purpose only. Students have to keep away from Internet shopping and buying valuable items.

With the proper use of credit card, students value money and use it responsibly as they grow up. They have to be mature enough to take care of their financial bases and use money accordingly. Parents need not instruct their children on how to use money on different occasions. For building a good credit, you need to choose a student credit card that caters to all your financial needs.

Get a credit card whose grace period is long. This way you gain enough time to pay for the expenses before you accrue interest on your balance. Most companies that issue credit cards wait eagerly to add students to their customer's list. Therefore, companies are looking forward to issuing such credit cards to students for maintaining them as long-term customers.

A college student either in first year or in final year of graduation has to think over the finance management. The card lends a name to students on the market, so they are able to borrow loans from financial institutions without any restrictions. All students need to show the statement of credit to the lender while obtaining loan. Lenders then get an idea of the student's credit history and give their approval.

Student credit card helps students in many ways. You are able to bear your tuition costs individually along with other educational costs. You learn how to live within a budget and take care of finances. Build your credit history with this credit card and progress in life. While you use this type of credit card, you are able to track the expenses on hand and accordingly try to cut short some of them.

What is My FICO Score?

FICO credit scores are calculated from several angles of difference in your credit data. Your financial activities are represented by a numerical figure between 300 and 850, with 300 being the worst and 850 being the best. Your FICO score is used by all financial institutions to gauge whether or not you are qualified for a loan and/or other credit related services.

You must understand that how your FICO score affects your financial opportunities to a certain degree and, as a result, your lifestyle. Your FICO score is based on your credit report. A credit report is a complete history of all previous financial activities, back tracking from the day you started using up your credit cards, utility bills, previous and existing mortgages, and your payment history all throughout. A good credit history will result in a higher FICO credit score in your records. Financial institutions and other lenders use this score to come up with your potential of committing future payments on time and elaborates more of your character whether you are a credit risk or not.

FICO scores range between 300 and 850, and can be grouped as such:

650 to 850 = Good Credit

550 to 650 = Average Credit

300 to 550 = Low Credit

You must understand that your FICO score may very well change everything in your financial plans as it is also a very important number to all lenders about your reputation. This dictates them whether or not to grant you a loan, how much money they will lend you and how far they can extend their service. In the financial industry, this tells them about you, your past, present and future. If you score high in your FICO the more probability that you get to choose the kind of terms and service you want for yourself. This also includes lowering your interest rates as well. If you let your FICO fall then you will have a hard time recovering from your financial status and more frustration it entails by not taking care of your finances well. It could take years before you can recover so as early as possible be responsible on your spending and aim to have a high financial reputation.

What is the Average US Credit Score?

The credit score, also well known as a FICO score, is a statistical or numerical interpretation of the information portrayed through your credit file that basically provides a likely window to whether you would pay a loan back on time -- the higher your credit score, the higher your credibility in the loan market.

The report is written and generated by the credit bureaus on the basis of the information which they acquire from creditors and the companies from where you obtained credit in the past and other details composing mainly of your past payments, your credit period and the nature of credit that you availed and amounts still due. From this report a credit score is calculated which ranges from a minimum of 300 to a perfect score of 850. The median or average credit score for borrowers in the United States is 723.

This credit score acts as a ready reckoner and a handy mechanism to assess how much risk is involved by providing loans to a potential borrower. The higher the score of a likely debtor, the lesser is the risk posed to the lenders and a higher score also determines the likelihood of obtaining the best available deals and return rates.

The consumers who can manage to maintain their credit scores more than 700 are the ones who are usually charged relatively lower rate of returns, while those having credit scores rising further above 760 are charged the lowest prevalent market rates.

Those consumers having their credit scores below 600 normally have to pay relatively high loan rates. If you find it difficult to manage funds and your credit score dip alarmingly low and the credit score is really bad, you might find it difficult to secure loans from anywhere at all. Most creditors find the credit score of 620 to act as a break-even point.

The scores fluctuate from time to time, because your repayment determines your credit scores. The later your payment is made after a date due; it will affect your credit standings and will lower your credit score. Establishing or re-establishing a good repayment track record of settling the credit bills on scheduled time will help in strengthening your score.

Delayed payments of bills have a very negative impact on your score For instance, someone with an average credit rating of 700 plus can increase their score by as much as 20-25 points by payment of all the bills on the correct time in a given month.

Elevated debts can affect your credit score. Stretching out all of your credit cards to the maximum limits might lower your average score by as much as 70-80 points.

It is advisable that one should not open credit card account that they do not require. Even a closed credit account would still appear on your credit report and may be considered while evaluating your credit score. Every new subscription tends to reduce the average credit account age, which would eventually cut your score down further by a margin of 10-15 points.

Although it is better to have a credit account than none at all because generally, having credit cards and timely repayments in the same will increase your score. Someone who does not possess credit cards, for instance, has a tendency to be at a higher risk than anyone who has responsibly managed their credit cards.