The Myth About Average Credit Scores
As a credit holder, may you be new or veteran, have certainly wondered how the credit scores of other credit holders are doing. You would comfort yourself by thinking that perhaps they are the same as you, missing documents and lapsing due dates. Or you may feel fear while speculating about what if they are much better credit holders than you are. Yes, there are various credit holders out there. The same thing goes with credit scores. It may burst your bubble but the answer to the question in your head is no, there are no such thing as average credit scores.
For that frequently asked question, there are sadly no simple answers. Credit scores also known as FICO scores usually range from 300 to 900 points. The creditors lending money utilize these scores as a window to the background of a potential creditor. It is a basis on whether or not a creditor is worthy to be approved. Most of the time, the people with ratings that fall from 620 points and below tend to have a hard time acquiring the coveted credit. And if they do so despite the low credit score, they will still most likely get the least flattering terms and conditions. As desperate as it sounds, it seems like it is better to have bad service than to have no service at all. On the other hand, people who have credit scores 700 points and above can look forward to top of the line terms and conditions as well as be placed in an arrangement where you have the privilege to make settlements about how you wish you credits will be handled. This is the kind of position that only people on the 620 and below can hope for.
According to a publication authored by Fair Isaac, the maker of credit scoring and the one providing credit scores to three big time credit bureaus entitled “Understanding Your FICO Score”, it says there that the average credit score actually varies from the lender and the industry. The creator himself said that this credit score does not exist. Nevertheless, the word of mouth still lingers among people involved in this kind of business.
Now that you are already aware of this, you must escape from the thought that you belong to the average credit score holder. Work your way up and receive the best services they can offer. Because as proved by evidence and survey, average credit scores will remain a myth from this time forward.
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Paying Bills on Time
As you may know, credit is one of the biggest problems a person can have. Even most of the world’s countries are in debt. This little devil just gives everyone a headache, but you wouldn’t have any problem to begin with if your credit score was in good shape. Don’t wallow in the doldrums if your score isn’t exactly commendable, you can always do something to improve it. But before getting down to detail, you should first know what credit score is.
Credit score is a numerical expression that shows the creditworthiness of a consumer. Lenders depend on this number to decide whether to approve you for a loan or not. If your credit score is high, you can attain credit from possibly anywhere you want to, depending on your source of income and the like.
Your score drops as you apply for a credit. When you are having a hard time getting approved for loans you are applying for, it basically means you have a poor credit score. To be able to boost it back up, you will have to be on time with your payments. And pay off everything in full amounts.
The majority of people miss a payment here and there, and even just one late payment can hurt your credit score. But there’s always a solution to every problem, first, know what your credit score is. You can get it online from the credit bureaus annually, free.
A surefire way to boost it is by paying your debts on time, there are other things as well. But this should be always on top of your list. When your credit score is improved, you can then start using credit again.
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Call Me Maybe: Establishing Good Credit Prior to Buying a Home Eileen Mazza Glastonbury, CT
Your credit score refers to the 3 digit number assigned to consumers as a convenient way for lenders to understand how credit worthy a certain person is. It is typically utilized in order to help these lenders decide whether you qualify for credit and what the associated interest rate will be.
When you apply for credit, your lender will probably request a copy of your credit report. This report will include a lot of information about your current credit standing. It also covers the numeric credit score. Given that lenders can easily get this information, it will be best on your part if you review the details yourself from time to time.
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How to Build a Good Credit Score
Credit is one thing we all can’t live with, yet can’t live without, at the same time. As much as we like the thought of not owing anything to anyone, there are inevitable times that borrowing is a grave need. And when that time comes, good credit score is certainly of help.
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Explaining Your Credit Score
You probably want to know the precise details in terms of calculating your credit score. It actually takes a little while to finish it and it is done by three companies and they all have their own ways to come up with the results. Thus, a credit score from one company can come out different from the other. To have an estimate on your credit score on your own, take into consideration some of these factors.
If you don’t own a credit card, don’t have any type of bill in your name, or haven’t tried borrowing money, you basically have a zero credit score. Actually, it’s not considered as a bad credit, it will just be hard for you to get a loan if you have no credit at all. However, there are some lenders willing to run the risk and let you borrow albeit without credit. But generally, it’s always better to build up credit.
You credit history will make up around 35% of your credit score, so it is very crucial. If you have unpaid bills or debt that you were not able to repay, it will be listed in your name and it will take 7 to 10 years before it gets deleted.
Every little bad decision you make will ultimately affect you credit in the long run, of course, negatively. If you are trying to make up for unpaid debts, it will still apparently appear on your credit report as bills that were paid late.
The length of your credit history makes up for 15% of your total credit score. Thus, as soon as you can, start building up credit. It will improve over time just as long as you have your bank account maintained. Essential information such as length of employment as well as residency will also fall in to this category. Therefore, it is more ideal to be stable in life than always having to move around.
Furthermore, 30% will actually be based on your current debts. Even when you’re always on time with your payments, if you have multiple loans at a time, then you run the risk of being denied more credit. So always get only the loans that you badly need and be punctual in paying as you don’t only boost your credit rating, you also get to save a significant amount of money on interests. If you do so, it will show on your credit history so you’ll be given lower interest rates on your future loans.
10% of your credit score will depend on new accounts. They will check how many types of loans you have and how many you currently have open. Remember not to open or close any account abruptly as this can be detrimental to your credit rating.
Always be cautious and educated. Knowing things like how a credit score is being calculated can help you find errors if there is any. Get your free annual credit report and review meticulously to make sure your credit score is how it is supposed to be.
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High Credit Score
We know all too well that the higher your credit score is, the better your control is on your finances. Truth be told, you’ll experience better benefits, save money, and enjoy lower interest rates than most of the people who have lower credit scores.
If your credit score is high, creditors are more likely to back up your loan and give you the best rates possible as they believe in your borrowing skills. Suffice it to say, you should always strive hard and focus on getting your credit score as high as you possibly can.
One of the most vital things to avoid is having too many credit cards since this can give your prospective lenders the wrong idea that you can’t live within the money you can make and giving you another loan might just prevent you from meeting further obligations. The best thing to do is to limit your credit cards to three or four cards.
Also, pay your bills on time. You should have at a record of at least seven years of promptly paying your financial obligations. Most creditors don’t approve individuals applying for loans with a history of late payments. Simply put, if you plan on applying for a loan in the future, start getting in the habit of paying your bills on time.
Also, always obtain you credit report. Just so you know, you are annually entitled to a free credit report from credit bureaus such as and Equifax, Experian, and TransUnion. Check for any error or inconsistency and if there is any, immediately report them to the bureaus which will then fix it within 30 days after a thorough investigation. Save and monitor all account statements you have as some credit card companies have the tendency to raise your interest rate or drop your available credit if you are late on a payment, even if it’s not to their own company.
Start improving your financial status. With time and effort, you will definitely get that score you’ve been rooting for.
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Keeping a Student Loan Credit Score Friendly
Student loans can indeed affect your credit score. You can make it favorable to you, though. Here are some tips:
1. Always pay on time
Poor credit score is always bad news, even for students. Paying on time will show on your credit report and will yield a good payment history. If you’re a student that has a credit card and a student loan, they could actually be a plus to your credit score. They are telltale signs that you can handle your finances well.
2. Be in control of your credit card debt
It affects your credit score more remarkably than an actual loan, however it doesn’t imply that you should focus on it more than your student loan. Student debt doesn’t go away even if you file for bankruptcy in the future.
3. Communicate with your lenders
Inquire with your lenders if you feel you can’t keep up so that you can talk about how you can eventually get back on track with your loan. They could give you a 30-day or 60-day reprieve on your loan, so you need not worry about your payments in the short term.
4. Regularly check credit reports
This should be regularly done by college student so they are in the know of their payments and their loans. Know that some lenders do not give reports to all three credit bureaus and loan reports are not always the same. Be cautious with unauthorized purchases or loan approvals as well and make sure you refute them.
Prior to applying for a student loan, see to it that you can handle it well. It need not be a negative on your credit, given you know what to do to make it work for you-as a student and as a future college graduate.
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Is It Worth It To Work For Good Credit?
Dodging bad credit is a struggle people go through on a daily basis. They pay their bills on time by working their tails off. They hold out on their wants so as to pay interest on debt just to get good credit. This is a struggle to dodge bankruptcy or home foreclosure. However, is good credit really worth all the effort?
Countless households almost always pay off home mortgages that even exceed what they could sell their homes for in the market because of real estate bust. A lot of others are burdened by high interest credit card debt. Is it worth it just to get good credit? At what point do the benefits outweigh the struggles?
While the real estate market is dwindling, more and more are making the hard decisions to abandon their homes, downsize and let their banks foreclose.
Consumers are getting frustrated and ask what the benefits of their good credit are in the long run when the crisis has left many lending avenues depleted regardless of your credit score.
Your credit standing will display your financial reputation. Also, it will show the ethical concerns of walking away from your obligations. Loans and credit cards are accepted by individuals sans taking into what the future of their fortune holds. The advantages of good credit involve better financing terms, lower rates, easier payoff schedules and approvals for otherwise difficult loans.
The advantages alone can make your living costs more controllable. Nevertheless, would losing good credit benefits outweigh the relief you would be getting from relieving yourself of your huge debt?
There is always a chance that you could overcome, particularly when you become overburdened and your present debt burden seems hopeless. Bankruptcy and debt relief solutions that are built to help out in such situations must not be ruled out ever. Bad credit and the loss of good credit benefits will result, for a time, but in certain situations this can still be a sound financial decision.
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Categories: Credit Score Articles Tags: benefits, Credit History, Credit Score, credit standing, interest, market, time
How can you raise you credit score even when you pay on time?
Question by amhjp1820: How can you raise you credit score even when you pay on time?
Ok, past credit messed me up. I have a judgement that’s almost paid off. I am trying to raise my credit score. I have 3 new accounts that I’ve paid on time for over 1 year. I read that one way to raise your score is to “piggy back” on a relatives good credit (have them add me to one of their good accounts and not use it) Is this safe, is it legal? I would love to hear constructive ways to increase my credit score. Please don’t judge me. Almost all of my “bad” credit accounts have been paid off. I put my sons first when the divorce came. They lived in the house that I paid for while I lived in a basement.
Best answer:
Answer by Sugarbaby
Did you know each time someone checks your credit score it goes down? I didn’t know this until they told us.
Add your own answer in the comments!