Many lenders won’t count a payment loan against your debt ratio IF there are less than 10 payments remaining. The better it is, the less you’ll pay in interest and for insurance packages. Increasing the score is the aim of any person.
Do you know what a credit rating is? Furthermore, do you know what your own personal credit score is? Most people don’t think they need to worry about it. They do. Even if you don’t ever borrow money you need to be concerned. Let’s say you need to buy a new car, and like most of us, cannot pay cash for it. You will need a car loan. At some point in your life, you will probably want to buy a home. You will probably need a mortgage! The most important factor the lender considers is your credit history and credit score. This wil factor into the interest rate offered to you. You need to understand this important part of your financial life in order to manage it to work in your favor. If you ignore it, it will probably work against you.
Gas companies and department stores usually use finance companies, rather than major banks, to handle their credit transactions. These cards don’t do as much for your credit score as a bank card (Visa, MasterCard, Discover, etc.), but they’re usually easier to get.
Positive Account History: These are all of your current and past credit accounts. Most, but not all, lenders report on each account that is established with them. There are essentially two different types of account types. They are as follows.
The person who loans the money, goods and/or services is called the creditor or lender and the person who receives those items is the debtor or borrower. Credit is more than just a plastic card you use to buy things-it is your financial reputation in the business world. Good credit means that your history of payments, employment and salary make you attractive (less risky) for a loan, and creditors-those who lend money or services-will be more willing to work with you.
On the debt side of the equation, usually only debts that are reported on your credit report are counted against your debt ratio. That means, for example, your car insurance payments or your gym memberships aren’t taken into account. As well, many utility companies, such as electrical, gas, and water, will report your monthly payments on your credit report. However, utility bills and cell phone bills are usually not counted against debt ratio, even if they are on the credit report. In any case, debt ratio is not a good indication of your debt levels.
While most of the time the three reports seem to be pretty consistent with this, sometimes their is discrepancies on this. So let’s look at and how it relates to is a personal loan revolving or installment. On all credit reports they will have a section that is a personal loan revolving or installment designated to prior payment history for the past 24 months (even if you haven’t had the account for 24 months). In this it will either say “0” or “OK” which tells you that the payment was made and recorded on time. If you have late payments on the account it will say “30, 60, 90, 120+” in the payment history area. The best designation to have is “pays on time, never late”. If you have had late payments though, they only effect your credit score for 24 months from the date of delinquency.
The best way to boost your credit rating is to show that you are responsible on the 2 major kinds of loans, mainly the installment and revolving debt. The revolving debt is mainly your card and the installment loans can be student loans, mortgage, personal and auto loans. If you currently do not have any, consider getting a small personal one and make sure that you can pay them consistently. You need to report the loan to the credit bureaus and once you have proven that you can handle loans and other bills responsibly, you can get some good deals from the credit union or the community bank.
You’ll improve your scores fast if you show you’re responsible with both major kinds of credit: revolving (credit cards) and installment (auto, personal, mortgages and student loans).
Another thing to check for as you learn how to improve your credit score are debts that may have been forgotten. An old water bill, doctor’s bill or so on, can cause real issues. Pay them off to help fix issues in your report that could impact your score.
Is your credit score always accurate? No. It is estimated that almost 80% of credit reports contain errors. So if you want to correct these errors you will have to get a copy of your report. Fortunately, the Fair Credit Reporting Act requires each of the nationwide consumer reporting agencies (mentioned above) to provide you with a free copy of your credit report, at your request once every 12 months.