What is a credit report score?

What is a credit report score? I’m sure many people still wonder what is a credit report score, and in particular, what makes, indeed, a good credit score! Let’s try to answer these 2 questions…

Credit report score – What is it?

A credit report score is the basis used by lenders to determine if your loan application will be approved or not.

• If your credit report score is above 700, there won’t be any problems and your loan will be granted with low interest rates.
• If however you score below this figure, you will be charged a higher interest rate and in the most extreme cases, they will not approve your loan application.

But how do creditors come up with this figure? Basically, they do this by reviewing credit related information such as your payment history to find out if you have ever had any late payments or filed for bankruptcy. They will also check how much money you owe not only on your credit card bill but also what are your outstanding loans. They will as well take into consideration the length of your credit history. In addition, for a lot of people that apply for new credit lines there could be a few other minor factors that could bring up or down your credit score.

What is not in your credit report scores is your color, gender, marital status, national origin and religion: all of this is not relevant. Creditors do not also consider if you are receiving public assistance or any consumer rights that are under the federal Equal Credit Opportunity Act or the Fair Credit Reporting Act.

Important: You can get a copy of your credit report score so you know what where you stand. You can get this from one of three credit reporting agencies namely Experian, Equifax or Transunion. Consumers are advised to get a copy at least once a year since it changes annually.

If you credit report score is not satisfactory, you must do your best to improve it. Some of the things you can do include:

• paying your bills on time,
• contacting your creditor regarding your situation so an arrangement can be made and
• seeing a non profit credit counselor who will help you manage your finances.

As much as possible, you must never file for bankruptcy because it will be very difficult to achieve a good standing for your credit report score. If it happens that you do see errors in your credit report and believe that there is a mistake, you must write a letter immediately to the agency where you got this document so this can be corrected. You must state the issue and any supporting paperwork to strengthen your claim. Never send the originals so have something to hold on to and if this is sent by a courier, make sure that you get a copy of the return receipt so you can follow this up with whoever got it. The reporting agency will then conduct an investigation by contacting your creditors. If the creditor cannot verify their entry, they have no choice but to remove this from your record and you will receive a free copy of the revised credit report score. The same goes when an error has been made and a copy of this revised version will also be sent to other credit agencies.

Now that you know what a credit report score is, it is time to find out what is your standing. This should be good at all times so you get the best deals when you have to apply for a loan to pay for college tuition, buying a car or a new home.

Good Credit Score – When is that?

A good credit score is very important. A good credit score has a profound effect in terms of the interest rate you will be paying when you apply for a consolidation loan. This is the basis that lenders use to determine if you will be able to pay for the amount in the future and if you need money to pay for college or renovate the home… it is good to know what it means to have a good credit score?

The credit score ranges from 340 to 850. And a good credit score is above 700…

As we said, creditors and lenders will determine this by reviewing your payment history, amounts that you owe, the length of your credit history, the types of credits you have used and new credit. If your credit score is over 700, then you have a good credit score. This means you are more likely to receive other financing options and better interests compared to someone who scored lower. The majority of Americans have approximately a 60% good credit score. This means that while many of us are doing well, there are others who need to improve theirs. Should you be one of those who got a lower rating, don’t worry because you still have a chance to improve it. You can do this by paying off your debts especially if most of these are reflected in your credit card bill. The best approach is to deal with the credit card that has the highest interest rate then work on the rest.

Should there be a problem coming up with the money, you must contact your creditor regarding the situation so a payment arrangement can be made so your late payments will be seen in your credit report (so you can get a good credit score…). It’s nice to have many credit cards but if you have a hard time monitoring which ones were already paid, don’t even think of getting another one as this can lower your (good) credit score. You also don’t have to close unused accounts because a zero balance can also work to your advantage. At the same time,  people with good credit scores must never open new accounts especially if their credit history is less than 3 years old. This may bite you back later on since you may not be able to handle this properly. There are some who know that they deserve a higher credit score than the one that came out in the report. If you feel that there is something wrong, you must call your lender because it is possible that the limit that was reported is much lower than what you are aware of. Should this be the case, it is only right that you have this corrected. To know if you have a good credit score, you can get in touch either with Experian, Equifax or Transunion. These three are individual credit agencies and each of them should reflect the same figures. You should get a copy from one or all three at least once a year to know your current standing as your transactions this year may be higher versus the previous year that could either be good or bad for you. If you don’t want any problems make sure that you have a good credit score at all times.

If you need help, there are financial advisers that are more than willing to help you out and get a good credit score!

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