Understanding Your Credit Score
By Mike Wayman
Many consumers do not understand the importance of knowing the criteria used to determine their credit score. Knowing these details helps when you apply for a loan, seek to modify an existing loan, apply for a job, or even change auto insurance companies.
The credit score is comprised of five categories: Your payment history, the total amount you owe on all existing loans, the length of your credit history, the amount of new credit you have, and the types of credit you use. Lenders look at how well you make payments on existing loans and how many times any payments have been late. The also look at the total amount you have outstanding on loans, and compare that to your total worth. For example, owing more than the value of the property you own is always viewed negatively.
Also considered is how long you have been using credit. Someone with a history of using credit successfully for twenty years usually fares better than someone who just got his or her first credit card six months ago. Lenders look at how much credit you already have, and determine whether you are overextending yourself by applying for more, and lastly they look at the types of credit you use and whether you typically carry unpaid balances on store charge cards or pay off balances regularly.
Essentially, your credit score affects every aspect of your financial life, so it is important to know where it comes from.
5 Tips To Get Your Credit on the Road to Recovery
By Mike Wayman
I love lists. It is nice to know there is a guideline for me to follow – some sort of path to help me to get things accomplished. When it comes to improving my credit score, the first place I would look for guidance is a list of instructions. A list is functional, and it makes the most sense when it comes to planning the steps I need to take to improve my credit. Here are five of the most important things you can do to help improve your credit.
1. Look after your payment history. Make sure that you are paying your bills on time. If you have missed payments, try to get them current. And, if you did pay of a collection debt, it will not remove the amount from your credit report.
2. How much do you owe? Try to keep the balance low and pay off your debt. Also, do not close unused credit cards in an effort to raise your credit score.
3. Length of your credit history. Avoid opening a lot of new credit cards over a short period of time.
4. Tips for new credit. Check and see what your credit score is. And, work to re-establish your credit history with new accounts that you will pay off on time.
5. What type of credit to use? Use only the amount of credit that you need. You should own a credit card, but use it responsibly.
