Nathalie Fiset asked:




The accumulation of a bad credit rating reduces the consumer’s ability to do whatever he wants to with his or her finances. Hence, learning how to fix a bad credit rating is important to get back on track.

In the United States, maintaining a good credit standing is very iimportant, simply because establishments and various institutions in the U.S. are very particular with the credit ratings. You will find it hard getting a new loan, mortgage, etc. You may even find it hard to rent a condominium or buy a car if you have a bad credit rating.

What is a Credit Rating

People who have loans are subject to credit ratings. A credit rating refers to the assessment given by lending institutions specifically focused on the borrower’s failure to repay the loan.

The concerned lending company reports all the information incurred by the borrower to the Credit Reporting Agencies and Credit Bureaus. This information is made available by these two agencies to other companies who wish to seek knowledge of the borrower’s credit standing.

Information on a credit rating may include an account of previous credit problems, payment history, employment data, personal information and listing of present and previous credit accounts and their respective balances.

All of these things will reflect on your credit rating. And since credit rating is one of the most important pieces of information that lenders, employers, etc., use whenever they want to do a background check on you, coming up with a bad credit rating will definitely affect you.

Hence, if you want to modify your credit life and would want to learn how to fix a bad credit rating, here are some things you need to know:

1. Know the reports

Even if you know why you have a bad credit rating, it is best that you scrutinize every detail stated on your credit report. But before you can do this, you need to get the reports from one of the three Credit Reporting Agencies namely, Equifax, TransUnion, and Experian. Here you can see all the details that your present and previous creditors had reported.

2. Evaluate

Try to check and double check your credit report for any discrepancies. These things will have a great impact on your credit rating. If any such discrepancies occurred, it is important that you report the matter immediately to the agency and provide them necessary documents to support your dispute.

If in case you were denied credit by a particular lending company, it is best to get the credit report from the concerned credit agency that the company used to evaluate you. Just keep in mind that you have to do this within the next 30 days after receiving the results of your credit application.

3. Try to fix the bad credit rating yourself

It is best if you learn how to fix a bad credit rating yourself. The problem for most people is that they are lured to the fact that some companies or entities are skilled enough to help them or even teach them how to fix their bad credit rating.

The bottom line: no person or company knows your credit rating better than you do. Hence, the best person to fix your bad credit rating is yourself. You just need to learn the facts, the right tools to use, and the right information, for you to start and improve your credit rating.

Chances are the businesses that offer credit rating fixes may even make matters worst. Keep in mind that these are businesses and hence they are not concerned with your credit rating but rather your money. Of course, they will not be making transactions on your behalf without proper charges.

Just try to keep this in mind: you can do exactly what these businesses can do when it comes to fixing bad credit rating. It is as simple as that.

4. Modify your report

Modifications refer to collecting additional information that will support your capacity to settle any overdue accounts. This data may pertain to your good credit standing with other businesses that do not provide credit reports to the three credit bureau, a resettlement of unpaid accounts, etc. These things will definitely help you fix your bad credit rating.

Indeed, learning how to fix a bad credit rating is a surefire way to a reputable life away from bad reports and bad credit standing.

Joan

Jon Arnold asked:




Your personal credit rating is the only impression many credit lenders get of you prior to giving you a line of credit. If you fail to ensure your credit rating is high enough, chances are good you will undermine yourself in terms of getting the loans you want, getting insurance for your home and car and even stop yourself from getting the job that you want. To build your personal credit rating, you need to look back through the past.
Building a personal credit rating takes time. From the time that you sign for your first credit card to where you are today, every move you have made in the financial market has been recorded on your credit rating. This rating is collected by third party companies and credit reporting agencies. These companies collect information about you by the creditors that you are working with. This is done as a collective effort. Nearly all creditors report to these agencies and they each share the information (when legally allowed to) about you. They all benefit. You can’t stop them from reporting accurate information.

Personal credit rating information is gathered throughout your history, but this does not mean you can’t do something about it. One of the most important things you can do to improve your credit rating is to get a copy of your credit reports and verify that the information provided there is correct. It is estimated that 80 percent of credit reports contain some errors on them. These errors are not fixed for you automatically, though. There is no way for companies to catch the errors themselves. Therefore, it is up to you to do so, or the errors will remain on your credit report for years to come.

Pulling a credit report for yourself is easy to do. Each of the three large credit reporting agencies provides you with a copy of the credit report they have for you without cost one time per year. The three large agencies are TransUnion, Experian and Equifax. By requesting a copy of your report even just one time per year, you can check for errors.

Look for the following errors:

*Credit accounts that you do not have.

*Accounts that are reported incorrectly, such as being late when you know they were paid on time.

*Accounts that are missing information.

*Mistakes in balances, credit limits.

*Collection accounts.

*Inquiries (people who have checked your credit score) without permission to do so.

*Reports that are older than 7 years old, except for bankruptcies and foreclosures which remain on your report for up to ten years.

Anything you find on your credit report that you do not feel is accurate should be reported to the agency since it is affecting your personal credit rating. Mistakes can lower your credit score, which is the number given to your credit history. To report any errors on your credit report, follow the instructions provided by the credit reporting agency as each has a step-by-step method to help you report errors.

Your personal credit rating is a very important piece of information. It takes years to develop a good credit rating, but just a few errors on your report can cause you to instantly see a lower credit score. To build a good credit personal credit rating, pay bills on time, keep your credit lines lower than the balances and check your credit report at least one time per year from each of the three major agencies.

Julio

Joseph Kenny asked:




Your credit rating is important. It may determine whether you can get a car loan or a mortgage. But do you understand the elements that decide whether your credit request is approved or denied? Here’s what you need to know about your credit rating.

What Is A Credit Rating?

When people apply for loans, credit cards, store cards or mortgages) they are scored according to factors in their application and their credit history. This effectively makes up their credit rating and determines whether lenders think they are a good risk. The credit history looks at areas such as:

Whether people have recently applied for credit

How long they have had credit

What type of credit they have had (such as different types of loans, credit cards or a mortgage)

How much money they owe in total

What their payment history is.

Lenders are particularly concerned with whether people have paid the specified repayments on time. Although one or two late payments may not unduly affect a person’s credit rating, regular late payments will raise question marks for lenders.

Looking Into Your Financial History

Lenders are also concerned about other aspects of people’s financial history. For example, lenders will want to know:


Whether people have had any County Court Judgements (CCJs) against them

Whether they have ever been made bankrupt

Whether they have ever defaulted on a loan or credit card

Whether they are in arrears on existing loans or credit

How many credit applications they have made recently

Whether they have been turned down for credit in the past

Much of this information is held in reports compiled by credit reference agencies. Equifax and Experian are the largest and best known credit reference agencies in the UK. People can find out what information is held about them by paying a small fee and requesting a copy of their credit report.

Other criteria that affect approval for credit are on lenders’ individual application forms. These might include whether people own or rent their homes and whether people are employed (full-time or part-time), self-employed or unemployed. Lenders also look into existing salary and outstanding credit.

How To Get Credit With A Poor Rating

Although having a poor credit rating can make it difficult to get credit, this does not mean it is impossible. Options for getting credit include:


Loans which are secured on the value of the property owned by the applicant
a higher interest credit card, with an interest rate that reduces once the holder shows a good payment history

A prepaid credit card, which works like a mobile phone top up card

Some people have a poor credit rating even when they have no CCJs or arrears on their credit report. This might apply to self-employed people (such as taxi drivers, market traders, hairdressers and other small business people). These people have similar options for getting credit. And they don’t have to live on the streets, either. There are self-certification mortgages to enable self-employed people to buy houses.

Scott

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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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