July 9, 2008
The Making of Your Credit Rate Score
By Richard Lakin
When it comes time to purchase a home or take out a big loan, your credit can either be a huge benefit to you or it can be something that holds you back. That distinction will come as a result of some of the decisions you have made in the past. Here are a few very important things that will determine how strong your credit rate score is.
1) Are you always applying for credit?
Rather you thought so or not, applying for many new credit cards hurts your credit rate score. When a person has applied for many credit cards or loans, the creditor looks at their history and sees instability. Even if you are approved as eligible for such cards, your credit rate score might still be impacted negatively as a result.
2. Make sure your information is correct
As having incorrect information held by credit bureaus can lead to a low credit beacon score. If credit reporting bureaus do not have basic information such as your correct home address and place of work, then your credit rate score can be negatively affected. You should always remember this, because it’s really of the utmost importance.
3. Do you have open accounts?
There might be an old credit card that hasn’t been used in years. You may have forgotten about it when you cut up the card, but the balance still lurks on your credit report. Even if you have old accounts you no longer use, you still need to include it. The credit rate score of an individual can be negatively affected if he has several open accounts; hence, sometimes it is better to close them.
4. Make sure the credit bureaus don’t destroy your credit.
By them, I mean the credit reporting bureaus. With so much information out there, mistakes are sometimes made. Make sure that they have the correct information, because if there is an error on your credit report, it could really be putting your credit rate score down. If you dispute these errors, then your chances of getting that loan will increase significantly.
5. Be alert and monitor your credit report once every two months.
Monitoring your credit report every couple of months is a great idea. By doing this, you will be making sure that nothing unauthorized is happening under your name. In addition, you will have a good idea of what you need to do in order to raise your credit rate score for the future. Overall, it is just a good policy to closely police your credit score rating.
6) Try to pay your bills on time and it should be evident.
It may be a no-brainer for some, but others struggle to realize the detrimental effect a late payment has on a credit rating. A sure way to take a hit at your credit score is by paying bills late. Each time this happens, your report looks a little bit worse and your credit rate score takes a hit.
7) Lower your debt.
Having too much debt can kill your credit rate score. If you don’t have a big income and you have a lot of revolving debt, then lenders are not going to want to extend you any sort of loan. This is especially true of consumer debt, which is a known credit rate score killer.
Your job, place of work, and your earnings.
Where you work and how much money you make is something that can have a profound impact on your credit rate score. Make sure that each of the reporting agencies has this information on file. The better your job, the better your score is likely to be, although this isn’t always the case.
9) Major detriments to you score are tough to fix.
Some things are more difficult to recover from than others. Things like a collection, bankruptcy, or foreclosure will take a long time to recover from. These are difficult situations that happen to many successful people, but you should keep an eye on your credit rate score while you are going through the difficulty.
10) Missing a payment is one of the worst things that drag down your credit rate score.
If at all possible, do not miss making payments on your account for any reason. At least make a partial payment, as this will be more desirable than missing the payment entirely, so pay what you can.
Topics: Credit |
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