Major Threats to Your Credit Score

5 Major Threats to Your Credit Score

A person’s credit score is an extremely important tool, especially if the individual wishes to apply for a loan, or wants to get insurance. Maintaining a good credit score is crucial for maintaining a sound financial picture, since this allows the person to apply for loans without encountering too much hassle. Here are the 5 major threats to one’s credit score.

Bankruptcy

A bankruptcy is like a big black eye on a person’s credit report. It tells prospective creditors that you’re unable to honor your promise to pay back your debts and other financial obligations, from utility bills, credit card charges, child support and more. Although it may take a while for a person to rehabilitate his credit score after bankruptcy, the impact of the bankruptcy though dissipates over time. To restore your credit worthiness, you will need to add new trade lines to your report, as well as take on other forms of credit, like a small appliance loan, so that your credit score will not stagnate.

Late, Or Missing Payments

Credit scores generally monitor how a person manages his or her current and past credit obligations and payments. By incurring a number of missed payments and late payments, your credit scores will certainly fall back hard. The habit of continually missing on payments, or making late payments, gives your creditors an indication that you may do the same in the future, and so this greatly reduces your chances of availing loans from creditors in the future. Always ensure that you never miss bill or loan payments, to maintain a high credit score.

Incurring High Credit Card Balances

Whenever a person incurs high balances in their credit cards, their credit scores go down hard too. The classic case of over-utilization of credit cards happens when the individual runs out their balance, or goes over their credit limits, and only pays the minimum amount each month to avoid further financial problems. Always make it a habit to use your credit cards only when required, and always settle your balances as soon as possible.

Settling With Former Creditors For A Lower Amount

Whenever a person settles his or her former debt with a former creditor at a much lesser amount, this actually does more damage to your credit score. Because you’ve settled with your former creditor for an amount less than what you actually owe them, the creditor eventually reports the remaining balance which you weren’t able to pay, to the credit reporting agencies, and this will get noted in your credit report as a “deficiency balance”. If you have debts with former creditors, make sure that you work out a full settlement with them, and guarantee that what’s accomplished between you and your creditor does not get reported elsewhere.

Not Having a Credit Score

According to credit experts, many people today still don’t have their own credit score. However, if you don’t have a credit history, you certainly won’t have a credit score, and you’ll have a lesser chance of obtaining a loan, insurance or other forms of financing.

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5 Major Threats to Your Credit Score

A person’s credit score is an extremely important tool, especially if the individual wishes to apply for a loan, or wants to get insurance. Maintaining a good credit score is crucial for maintaining a sound financial picture, since this allows the person to apply for loans without encountering too much hassle. Here are the 5 major threats to one’s credit score.

Bankruptcy

A bankruptcy is like a big black eye on a person’s credit report. It tells prospective creditors that you’re unable to honor your promise to pay back your debts and other financial obligations, from utility bills, credit card charges, child support and more. Although it may take a while for a person to rehabilitate his credit score after bankruptcy, the impact of the bankruptcy though dissipates over time. To restore your credit worthiness, you will need to add new trade lines to your report, as well as take on other forms of credit, like a small appliance loan, so that your credit score will not stagnate.

Late, Or Missing Payments

Credit scores generally monitor how a person manages his or her current and past credit obligations and payments. By incurring a number of missed payments and late payments, your credit scores will certainly fall back hard. The habit of continually missing on payments, or making late payments, gives your creditors an indication that you may do the same in the future, and so this greatly reduces your chances of availing loans from creditors in the future. Always ensure that you never miss bill or loan payments, to maintain a high credit score.

Incurring High Credit Card Balances

Whenever a person incurs high balances in their credit cards, their credit scores go down hard too. The classic case of over-utilization of credit cards happens when the individual runs out their balance, or goes over their credit limits, and only pays the minimum amount each month to avoid further financial problems. Always make it a habit to use your credit cards only when required, and always settle your balances as soon as possible.

Settling With Former Creditors For A Lower Amount

Whenever a person settles his or her former debt with a former creditor at a much lesser amount, this actually does more damage to your credit score. Because you’ve settled with your former creditor for an amount less than what you actually owe them, the creditor eventually reports the remaining balance which you weren’t able to pay, to the credit reporting agencies, and this will get noted in your credit report as a “deficiency balance”. If you have debts with former creditors, make sure that you work out a full settlement with them, and guarantee that what’s accomplished between you and your creditor does not get reported elsewhere.

Not Having a Credit Score

According to credit experts, many people today still don’t have their own credit score. However, if you don’t have a credit history, you certainly won’t have a credit score, and you’ll have a lesser chance of obtaining a loan, insurance or other forms of financing.

Click here for more information on credit repair.

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Disputing Discrepancies on Your Credit Report?

5 Ways To Dispute Discrepancies to Your Credit Score

A person’s credit score indicates how credit-worthy and financially responsible they really are.

A credit report is usually sourced from the nation’s three major credit reporting agencies, which includes Experian, Equifax and TransUnion. However, the big three are not immune to errors and major flaws, and according to credit experts, these three agencies incur error rates ranging from 20 to 30 percent, although some of the errors may be as simple as reporting the wrong month of a delinquent account. Nevertheless, any simple credit report errors may still have a damaging on the person’s credit score, which can result in the individual getting rejected for a much-needed credit line. Here are five ways for disputing discrepancies in your credit report.

Order a Copy Of Your Credit Report From The Big 3 Credit Agencies

The first thing to do is to order a copy of your credit report directly from each, or any of the three major credit agencies. Don’t get your credit report from third-party agencies, because chances are you could be disputing errors or flaws that don’t even exist. According to the US Fair Credit Reporting Act (FCRA), the major credit agencies are responsible for correcting or reducing any flaws and errors in their credit reports. The FCRA therefore, enables you to directly contact these credit reporting agencies, and formally relay your disputes or complaints.

For more detailed information see “The Art Of Damaged Credit Repair.”

Make Sure Each Report Is Not Past The 7-Year Limit

Once you get a copy of your credit report from the major credit agencies, compare each of the reports, and ensure that these are not past the seven year limit for reporting of any errors or negative information. Also determine if the status and delinquency dates are not incorrectly noted.

How To Dispute Any Errors You Find

Once you personally find any discrepancies or flaws, you can dispute these through filing your complaint online, as well as by writing a letter to the specified credit agency. While sending your dispute on the Internet may be much faster, it only offers you limited options to explain your reasons. However, if you write a letter, make sure you limit it to around 100 to 150 characters, or 30 words, to directly state your case. To file your dispute online, visit the agency’s Web site, and look for the “Dispute” option. Enter your identifying information, and proceed to state the dispute. In sending disputes by mail, find the agency’s official mailing address, which is usually located near the end of your report, and include your name and address, report number, as well as the account numbers you’re disputing.

Once you receive a copy of your credit report from any agency, the agency is normally given 45 days to send the results of your dispute. But if you paid for your report, the agency will usually deliver this to you in around 30 days. Once you spot any errors or inconsistencies in your credit report, it’s important that you question and dispute all those inaccuracies, and never assume that something is correct, just because it’s reported by one of the major credit reporting agencies.

For more help click here.

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Building Your Credit Score?

5 Ways To Build Your Credit Score

Whenever you wish to get a loan, you need to know something about your credit score. A credit score is a number that creditors look at to determine your viability to get credit. A bad credit score can keep you from financing your kid’s education, or from buying a new home. Therefore, it’s very important to build a good credit history. Her are five innovative ways for building-up your credit score.

Get a Credit Card, And Pay Your Balance On Time

To get started in building a nice credit score, get a credit card, but remember to only start out with  one credit card for the moment. Remember that the more credit cards you have, the more debt you’ll end up with. You need to be responsible with one credit, before you insist on applying for a second or third credit card. In addition, remember to pay your card’s balance on time. If you only charge your card for the items that you can afford to pay, then you won’t need to wrangle with any future debt problems By paying your credit card’s balance every month, this would indicate that you’re capable of paying your bills, and will send a positive signal to most creditors and lenders.

Don’t Ask For A Higher Limit From Your Credit Card Company

If you have a credit card, don’t be tempted to call your credit card company and ask for a higher limit, because this can help ruin your credit score. Next, don’t open any extra credit card accounts, because by having an extra credit card, or by canceling the other one, you can do major damage to your credit history. Also ensure that you don’t transfer your balance from a card that offers high interest, to a card that offers a lower interest rate.

Pay-Off A Sizable Amount of Your Current Debts

In order to build a good credit score, pay-off a sizable portion of your current debt load, since the more available credit you have, the more will your credit rating improve. Also have a considerable savings and checking account, as well as learn to regulate it too. Your creditors will view a well-managed bank account as a sign of stability.

Add Other Small Forms Of Credit

Once you’ve paid-off a large portion of your current debts, add other forms of credit, like get a small mobile phone contract, and pay it off every month. Small bills like mobile phone monthly payments may help to enhance your credit rating, and will also indicate that you’re well-rounded when it comes to handling different forms of credit.

Dispute Any Errors In Your Credit Report

If you still haven’t seen an exact copy of your actual credit history, get a copy now and analyze it properly. Log on to sites like annualcreditreport.com and others, and get a copy from the credit bureaus too. Once you get a copy of your credit report, check out each of the details, and quickly highlight, as well as dispute any errors or numerical flaws. An incorrect report can actually deduct as much as 100 points from your credit score.

Individuals with good credit scores are often called “prime borrowers”, and these people are more likely to get special interest rates and other rewards from creditors. However, those who have poor credit scores are often viewed by lenders as truly high-risk clients.

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