02 Sep

Get Inside Your Credit Rating

Posted by , under Maxing
Joseph Kenny asked:




What do you know about your credit rating? You may never even think about it until you get turned down for credit one day. However, the way you run your life may affect the way your credit profile looks years later.

Who Stores Credit Information?

There are two main agencies that store information about your credit history. They are Experian in Nottingham and Equifax in Glasgow. The credit file is opened the day you open a bank account. The longer you have had a bank account, the more trustworthy you seem, so it’s best to keep one primary account for the sake of the credit report. That doesn’t prevent you from having a second account that might offer other incentives, such as a better overdraft limit or interest rates.

Your credit score goes up depending on what services you have from the bank. So, if you have a cheque account, a savings account, a credit card and other products, this means the bank trusts you and is a big plus for your credit status.

On A Roll

Whether you decide to vote or not, it is a good idea to appear on the electoral roll. This makes it easy to track and confirm your address details. Lenders will be concerned about whether you own or rent your home, or whether you are living with parents. Owning your own home is a sign of responsibility, and the fact that you have been approved for a mortgage looks good too. It’s best to have a telephone at home. If it is working, it means that you are up to date with your bill.

Stability And Responsibility

Responsibility is also the key factor when it comes to marriage and children. Being married with children means, in theory, that you are responsible. It also means that you are less likely to run off, leaving bad debt behind you. And the older you get, the more responsible you look in lenders’ eyes, so there are some advantages to ageing.

Having a job is an indication that you will be able to repay any credit that you get. Again, staying in the same job for a while indicates responsibility. Lenders like to see some history of earning an income before they approve a loan.

Managing Credit

Finally, having credit really helps your credit rating, as long as you have managed it well. Having credit agreements is good, as far as lenders are concerned. Making the necessary repayments on time is even better. Missing payments or defaults will lower your credit score, so they are best avoided.

If you do end up with a debt problem, arrears or County Court Judgements (CCJs), you may still be able to get credit. There are options such as payday loans for short term credit and secured loans for long term credit. There are even credit cards that cater for people with a poor credit rating. However, the interest rates will not be as good as those offered to people with a good credit report.

Annette
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14 Aug

Credit Ratings

Posted by , under Banks
Grant Rowe asked:




How banks decide who to lend to:

A bank will basically use three different types of information when deciding whether to give you a loan, credit card or mortgage. Firstly, it will look at the information on your application form. As well as items such as your age, income and marital status, it will look at how often you’ve moved jobs or home. This will give it an idea of how ’stable’ you are financially.

Secondly, it will look at how you’ve acted when it’s dealt with you in the past, so how you’ve operated your current account and whether you’ve repaid loans on time. Obviously, if you’ve never dealt with the company before this stage will be skipped.

The last of the three steps is to look at your credit report. There are three agencies in the UK who keep this sort of information. They are Experian, Equifax and Callcredit. Your credit report contains various bits of information about your credit history with other lenders, which we look at in more detail below.

Having looked at each of these three sources of information, a lender will then assess how you measure up on various points and build up its own credit score for you. If your credit score is greater than a certain number, your application will usually be approved. If it’s not, then you’ll either be rejected or offer a smaller loan or one at a higher rate of interest.

Unfortunately, lenders don’t disclose how they score individuals. Each company will assign a different rating to various issues, depending on their experience with customers in the past, so this is why you might be rejected for credit by one lender but accepted by another. Although it’s a popular misconception, there is no such thing as a ‘credit blacklist’.

What’s on your credit report?

Credit reports contain many different types of information about you. For example they contain matters of public record such as whether you are on the Electoral Roll (a prerequisite for approval by most lenders).

Your credit report will also show whether you’ve had any County Court Judgments (CCJ) against you or whether you’ve been made bankrupt, are in an Individual Voluntary Arrangement (IVA) or a debt management programme. Usually these items are shown for the last six years only but it can be longer if you’ve been issued with a bankruptcy restriction order if the court believed you acted dishonestly or were to blame for your bankruptcy.

Any recent applications for credit you’ve made are also shown on your credit report. Usually this information is kept for twelve months but Callcredit keeps it for two years. Whether the application was accepted or not and the amount is not recorded but obviously a lender will able to see if you then went on to have a loan with the company concerned.

Several applications for credit in quick succession can affect your chances of getting further credit as a lender may assume you have been refused or are in danger of taking on too much debt. One way around this problem is to ask for quote for credit rather than making a formal application. This won’t appear on your credit report and you’ll need to make a formal application if you do then proceed to take out a loan. You can also ask for a quotation search rather than an application search to be made.

This will appear on your credit report but any lender will be able to see it wasn’t a formal application.
If you have any financial associations with another person a note of this will appear on your credit report. In this instance, a financial association means having, for example, a joint loan, bank account, credit card or mortgage. A financial association allows a lender to access the other person’s credit report when assessing whether you’re suitable to lend to.

Just because you’re married to or living with someone, their credit history won’t automatically be associated with yours. Additionally, any credit problems previous residents or tenants of your property have had won’t affect your ability to get credit.

Finally, any debt agreements you have or that have been settled within in the last six years will also be recorded on your credit report, together with a summary of your recent payment record where applicable. If you are in arrears or in default then this will be shown. Not all lenders supply information to all the credit report companies so it may be that not all your debts will appear. Some lenders only supply negative information so a record might only appear if you’ve been in arrears or default.

As well as debt agreements, mobile and pay TV payment information may appear on your credit report. Information relating to the payment on utility bills or council tax does not however. Rather perversely, a lack of credit in the past can mean it’s more difficult to get accepted for a loan. Lenders prefer to see a clean credit history rather than none at all.

Getting hold of your credit report

You can write to any of the three credit report agencies and get your credit report for

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26 Jul

Credit Score Rating Scale – What You Must Know

Posted by , under Law Academy
Mike Singh asked:




All of us at one point or another have to refer to our credit reports. It can be for credit for a new dress, a new car and even a new house. It can be for applying for a new job. It can be for renting a new apartment. Indeed, there are many situations that require your report with your rating and score outlined in it.

Of course, your report also includes personal information such as full name and address, employer’s name and address and information regarding bankruptcy filings, court suits, foreclosures and short sales and trends in bills payment, to name a few. Credit bureaus collect all this information so as to calculate your score and rating.

Now, you will be asking what the difference is between a credit score and a rating since they appear synonymous. Yes, there are differences but the aims are basically similar – provide an objective gauge for third parties regarding your ability to make payments on time.

Credit Scores

These scores are your Fair Isaacs Corporation (FICO) score. This corporation developed the system used by all three major credit bureaus in the United States: Equifax, TransUnion, and Experian to calculate scores.

Your scores are expressed in the hundreds such that the lower the figure, the higher the risk. If you have a score of 350, you are a high risk debtor while a score of 850 means that you are a very low risk.

Also, it must be noted that the three major credit bureaus use different sets of criteria with varying weights to determine score although the same set of report information is used. You will most often be issued three different credit scores! Still, the three credit scores are often approximate their figures so you basically fall within a specific category of low, medium and high credit risk.

The criteria used to determine credit score include credit payment history, time length of credit history, current debts, frequency of applications for new credit and credit type mix. Again, it must be emphasized that the credit bureaus will assign different weights to each criterion. However, it is safe to assume that previous credit performance and current level of indebtedness get the most weight at about 30 percent each while the types of credit available and the time credit has been in use gets 15 percent each and pursuit of new credit is at 5 percent.

Credit Rating

Aside from the scores, most countries also use rating using a scale of 0 to 9. There are two types of credit rating signified by the addition of the letter “I” for installment credit such as home or auto financing and “R” for revolving credit like credit card debt.

Unlike the credit scores where the three bureaus collect the information from many creditors, the rating scheme is such that each creditor will provide its own rating for you. Thus, you may have an R1 in Visa but an R5 in MasterCard because you neglected to pay the latter in favor of the former.

Indeed, you have to be aware of your credit score and rating because these numbers have a very real impact on your life.

Suzanne
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15 Jul

A Bad Credit Rating? What to Do About It

Posted by , under disadvantages of poor credit and how to fix it
Molly Wider asked:




Something that many individuals with bad credit have in common is that they do nothing about it. They accept that they have bad credit and live with the consequences. Many don’t realize that it is actually not that difficult to fix a credit score. It does take patience as it can take a year, or many years depending on how bad your score is, but it is possible. The key is taking action and being consistent. The following are steps that you can take to improve your credit rating.

- Request your credit report. In Canada this means contacting Equifax Canada and TransUnion Canada. In the US this means contacting Experian, TransUnion, and Equifax. Many people are unaware that a poor credit rating could be due to clerical errors. Typos and duplicate entries on a credit report are not uncommon. Once you have your reports, review them closely to ensure that there are no errors. If there are errors, dispute the charges with the reporting agency and you could be back to an acceptable credit rating sooner than you think.

If you have established that your credit report is accurate, and would like to improve it, the following should be your next steps:

- Pay all of your bills on time. If you can’t pay the bills on time, call the company(s) you will be late in paying and let them know when you will be paying. Some companies will note these calls in your customer file and it may prevent them from reporting a non-payment. This will not always work, but it’s worth a try.

- Don’t cut up your credit cards. Many think that if they don’t use credit for a while their score will be fixed and this is not the case. You must use credit to gain credit. Reduce the amount of available credit on each card and reduce the number of cards you carry. Don’t just cut up a card, but call to have the account closed. Call or write to your credit card companies and ask them to reduce your interest rate. Paying a yearly fee for a lower interest rate on a card on which you carry a balance may be well worth it in the end. Again, if at all possible, be sure to pay your bills on time.

- If you have no cards, try to obtain a secured loan, or a secured credit card to re-establish your credit. Asking a friend or family member to co-sign on a loan or credit card is another method, but beware, if you don’t pay this debt, you may lose a lot more than a good credit score, so this should be a last resort.

Fixing your credit score is not impossible, but it does take patience, persistence and commitment. Following these steps should help you to improve your credit rating.

Nicole
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15 Jul

Is there anything else I should do to correct the information on my credit reports?

Posted by , under Credit
toastergnome asked:


My ex-husband and I divorced in 1998, I am now remarried with a different last name. He is now married to a woman with the same first name as me so now she has the exact same name I had when I was married to him. Can you see where the trouble begins?
So, I pull my credit report yesterday and find that there are 7 collection accounts on my experian report and 1 collection account on TU and 1 also on Equifax. I do my own “investigation” and find out that Experian has added my ex-husband’s new wife’s collection accounts to my report because we have similar names. Fine, but we don’t have similar date of births or social security numbers. I contacted Experian and have disputed these collections over the phone.
Now comes the hard part. I still had one common collection on all three of my reports and I knew it was not my bill. I called the Collection Agency to find out what information they had and sure enough it was my date of birth and my social security number. I then called the original creditor (a medical clinic) to find out what in the world was going on and to see if the New Wife was using my social security number. Turns out the bill was for her son and when she gave the billing clerk her name they pulled up MY old information instead and added the bill onto my account. The credit clerk at the clinic was very nice and said they would get it fixed with the Collection Agency. Meanwhile I have contacted all three CRA’s to dispute this collection account. I have worked very hard to build and groom my credit and it just makes me sick to think that somthing like this can keep me from getting the best intrest rates when I refinance my house. Have I done everything I can do to correct these mistakes? Is there anything else I can do to make sure these inaccuracies are removed?
Thank you all for your responses, I can’t pick a best answer because all of you had really good advice.

Jean
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26 Jun

How should I go about raising my credit rating?

Posted by , under Credit
Isendar asked:


About 8 months ago, I applied for a credit card. I use it religiously about 3-5 times a month (usually about $20/month) so that I can raise my credit rating. I currently have Capital One so the APR is quite high (Mine’s at 21.50% right now). I had 2 mishaps where I was unable to pay the $10 minimum payment. I owed over $400 (My credit limit) and now I just payed $100 of it. I’ll be done paying it off by the end of this month. My question is: How can I A: repair the damage i’ve done to my credit and B: go about raising my rating?. I inquired with the 3 leading credit rating companies (Equifax and others) as to my credit rating and they all state that my credit rating was inconclusive. Does this have to do with the fact that I just established my credit 8 months ago or the fact that this year is the first year i’ll be filing taxes with the IRS? I’m really clueless when it comes to credit and so are my parents. Any info would be great!

Claudia
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31 May

Tips To Improve Your Credit Rating

Posted by , under Bad Loans
Joseph Kenny asked:




The day you open a bank account is a very significant day. It’s the day you take your first steps towards financial responsibility. It’s also the day that your credit report is created – and unlike your bank, your credit report will be with you for the rest of your life.

Your credit report consists of financial data stored with a credit reference agency. Equifax and Experian are the largest and best known. Your credit report will affect whether you can get loans, credit cards, mortgages and other financial products. It will affect credit in retail outlets as well. That’s why it’s very important to keep your credit report looking good. Here are some tips to help you get a good credit score.

Keep On Banking

Banking history is an important aspect of any credit report. It shows financial responsibility. Banks check your credit too, so if you have a cheque account, an approved overdraft, a savings account and a credit card from your bank, lenders will increase your credit score. What’s more, the longer you stay with the same bank, the better that portion of the credit score gets.

It can be tempting to change bank accounts to take advantage of preferential interest rates or account incentives. The best approach is to keep and use your original bank account, even if you manage the bulk of your finances elsewhere.

Be Responsible

Responsibility comes in many forms. Credit checkers score older people more highly than young ones. They also score homeowners more highly than tenants. People who are living at home will not score well on this aspect of the credit file. Lenders are hoping to see the profile of a responsible citizen. Someone who owns a home is less likely to disappear and leave bad debt behind.

Another aspect of being responsible is being on the electoral roll. This means that your local authority has a record of where you live. It also makes it easier for lenders to look up your address details. If they can’t find your address, they may hesitate before lending money.

Make sure you have a telephone at home. This is a sign that you have successfully passed a credit check and that you have paid your bills on time. Lenders will see this as another way of showing responsibility.

Manage Your Credit

Another key way to improve your credit rating is to get some credit. This can be a store card, credit card, loan or other form of credit. Whichever you choose, the trick is to manage it well. That means making payments on time and in full, no defaults, no arrears and definitely no CCJs. Managing existing credit well looks good on your credit report and makes you a good risk for further credit.

Good credit history, responsible banking and traceability will help to improve anyone’s credit report. And if you have got bad credit there are still many loan and credit products available to you. If you manage those well, then you could be on your way to a better credit report.

Darrell
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23 Oct

Getting Mortage Based Entirely on FICO Score?

Posted by , under Renting & Real Estate
CatDad asked:


I’m self-employed and I have an exceptional credit rating: Equifax FICO is 802 and TransUnion is 789……Does anyone know if I can get a fixed mortage for, say 100K, based entirely on my credit score?

Bertha
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