Time to Check Credit Score?
In case you have not checked your credit scores recently then you definately should think about taking time to do so, if for no other purpose than to be sure that you have no posting errors on your record.
Exactly why is very important that you check your credit scores? There are actually numerous good reasons why it is vital for you to do so.
It is really helpful for you to know what your credit scores are and where you stand credit wise before you fall in love with that new home or car that you want to purchase.
It is Important to Check Your Credit Report Periodically
The three main credit bureaus are Experian, Equifax and TransUnion.
Every place where you purchase something on credit may not report to all three of the bureaus. In fact, they may not report to any of them. Or, they may just report to one of them. Therefore, when your retrieve a copy of your credit report from only one of the reporting agencies you may not have a full picture of all that is being reported to the credit bureaus about your credit activity.
For this reason you really need to get a copy of your credit report and score from all three credit bureaus. This type report is termed a tri-merge credit report. It is not necessary to order a report from each bureau. You can order a tri merge credit report from various sources.
Does a Credit Check Lower Your Score
When you check your own credit report and score it does not impact your credit scores. So, checking your credit frequently is a prudent thing to do.
Other times when your score is checked by different creditors it may have a slight impact (couple of points) on your credit score. However, I have seen a couple of points make a last minute difference in someone getting approval or not for a mortgage. So, sometimes it pays to not shop around to much for the best deal on something like the interest rate on a mortgage because each place where you apply will be retrieving a copy of your credit report.
If you are planning on buying a new home or new car then it is best to be sure you have the deal you want before you actually apply for financing. Then let that one company retrieve your credit information one time.
Also Check Credit Score Periodically
You may not be planning on purchasing anything new in the near future but as previously pointed out it is important that you stay abreast of what is in your credit file. You can easily retrieve your credit report online. You can go online and get a tri-merge report from any of the three credit bureaus. There will be a charge for this report and scores.
Each of the three bureaus have their own scoring models which they apply to the data in your file in order to determine your credit score. In addition, they have different algorithms which they use to compute a score for different kinds of purchases. For instance, if your report is retrieved in order to approve a credit card for your use the score that is shown will be different from the score given if your credit is checked by a mortage company. The scoring model used to compute a score for a mortage approval is much more strict that one that is computed to allow you approval for a credit card with a much smaller credit limit.
The higher the risk to the creditor the more scrutiny that is applied to your credit history to determine if you are a good credit risk for that creditor.
Typically there is what is termed a consumer score, a score used for car loans and a different score used for mortgage loans. When you retrieve your credit scores from one of the online sources it is usually the score generated by the scoring model for consumer scores. Therefore, don't be alarmed if your fico scores are much lower when they are retrieved by a mortgage loan company.
Reasons for Checking Credit Score
One other reason to check whats in your credit file are to see if everything that has been posted to your file is truly yours. One of the more common posting errors is when a person is a Jr. or Sr. or has a very common name.
When you view your credit information you may find that there are items listed as unpaid that you know you have paid in full, often some time ago. This is not an uncommon occurance. This usually occurs because the creditor did not report you payment to the credit bureau as they should. This is especially true if it is a collection item which you have paid off. It is a good practice for you to send a letter along with a copy of your paid receipt to the three credit agencies asking them to make sure that this account is marked paid in full. I recommend that you send a separate letter for each account paid. When there is only one thing in the letter to be handled it is more likely to get done correctly.
When you see what is actually in your credit file you may discover that you don't have enough credit. In most cases to get approval for a mortage loan on a new home you will need at least five lines of credit (tradelines). Also, if you only have one or two lines of credit that are fairly new then you may not have enough data to generate a score for something like a home mortgage.
Monitoring All Three Credit Scores
Many people think it is a good practice to join a credit score monitoring service in order to be notified by email anytime there is a shift in their credit scores. This helps one to know what impact any of their credit activity has on their credit scores immediately. In addition, it can give you a quick alert and heads up on any identity theft type activity.
This is also very helpful if you happen to be taking steps to get any items cleaned up in order to improve your credit rating.
Strive to Raise Your Credit Score to 720
Over the last few years since the mortgage deboical lenders have made an ongoing effort to stiffen their credit score requirements in order to get a loan approved. This is why it is more important than ever for you to take care of your creditworthiness.
A good credit ranking is no longer just something that is nice to have; it is something that is critical to your financial future if you want to survive and prosper.
Good credit ratings no longer apply to just borrowing money. These indicators are used by more and more companies and individuals to determine if you are someone they wish to do business with.
Premiums charged by insurance companies are determined by the applicants credit rating. It can cost you a lot more money to carry insurance on your car or home if you have a poor credit rating. This is just a waste of your hard earned money.
Many employers will perform a credit and background check before hiring a new employee or even giving promotions to an existing employee. Cell phone providers will determine if a large deposit is required by checking the applicants scores first. Once again this is another waste of your precious dollars. Landlords use credit ratings to determine if they will lease an apartment or house to an applicant.
Just about everyone today want to know what kind of credit risk you present before they are willing to do business with you.
Prior to the mortgage mess a short while back a score of 720 was considered one that was really good and would allow the applicant to get some of the best loan terms available. Now, that limit has been raised to 740.
Also, back then a borrower was able to get 100% financing on a new home with a score as low as 580. Today, 100% financing is very hard to find and if so it certainly requires a higher credit score.
People with really good credit rankings still get credit card offers with really good interest rates. In addition, they are getting loan approvals for the things they want to buy on credit.
Those people with low credit scores have found that access to credit is harder to find and in many cases is simply just not available to them.
Many people today are not only not able to get a mortgage to purchase a home, they are having a hard time even finding a decent place to rent because not as many open apartments available and landlords are able to be more selective for tenants to fill those apartments. They are able to chose tenants who are more credit worthy and more likely to actually pay their rent ontime.
Improving Your Credit Standing
Now that we have discussed how important it is today to establish and maintain a really good credit rating let's get into things that will be helpful when it comes to improving your credit scores.
First off, no one can improve their scores and ranking if their financial situation is in the tank. If one can't budget their income and pay their current debt payments on time each month then it is going to be hard to improve their credit standing. First you must get a handle on your financial situation, start paying your bills on time and pay off some debt.
Additionally, you won't be able to raise your scores if you don't use credit. When you close all your credit cards and discontinue buying things on credit and leave your credit file with nothing in it but collection items you have done nothing to show that your are re-establishing new, positive credit lines. This new positive credit activity is needed to provide the scoring algorithms something to use to calculate a better result. If you just pay off all your old collection items and do nothing to re-establish new good credit lines then you are not doing much to help yourself out.
It is not necessary for you to pay interest on your credit cards in order to use them to show that you are creditworthy. Simply charge some small amount monthly and pay the bill in full, on time when it comes in. These positive ontime payments are being posted to your credit file and used by the credit reporting agencies to calculate your credit score.
If you have let your credit rating get out of hand then don't expect instant results when you start working on recovering it. It didn't tank overnight and it won't come back overnight. If you are serious about improving your financial future then first get started and then be persist in your efforts and it will happen.
A good start is to simply retrieve a copy of your credit report and scores. This will give you a starting point from which to work in checking your credit score in the future. Review your report and make sure that all the items being reported about you are correct. It is sometimes surprising to see the number of errors in people's files that are so negatively affecting their livelihood. No one is going to care, or correct these if you don't take action yourself.
When you have taken action to correct any errors you may find then start establishing that new credit and at the same time start paying off any collection items or current debt that you may have. It is important that you understand that you must establish new good credit and not just payoff old collections.
A person can't fix what they "think" is their problem. They have to know exactly what is in their credit file and where their scores stand before they can start to improve them.
3 FICOŽ Scores, 3 Credit Reports $39.95 With your credit report and scores you will have a starting point and also be able to monitor the results of your progress as you go along.
It is adviseable to sign up with a Credit Monitoring Service in order to keep abreast of the shifts in your scores. If you are taking no action then it is good to see the negative impact that this is continuing to have on your credit scores. However, when you are taking action to improve your financial situation then it helps to see the impact that your different actions are having toward improving your creditworthiness in the eyes of lenders.
One of the better Credit Monitoring services where you will Get email alerts when your Credit Score changes at CreditReport.com. Start today! I simply cannot emphasize enough the value of getting started and taking action. It is to your benefit to do so.
Are You Safeguarding Your Child's Credit Report and Score?
You may be asking "Does my child really have a credit report?". And the answer to that question would be yes they may have a credit report and score.
Parents are one of the most common ways for a child to build a credit rating. It is not uncommon for parents to add a child as an authorized user on some of their credit accounts, like credit cards. When they do then the lender will then start reporting any credit activity for that account to both the parent and the child's credit file, thereby beginning to establish a credit history for your minor child.
This can be a good thing or a bad thing for your child's credit depending on how well you are managing your credit rating. Because, as your rating goes, so goes your child's rating.
A much more serious issue is your child's credit report and scores when it comes to identity theft. In the previous discussion, you are in control. With identity theft you are not. Scammers and predators may be able to get access to your child's social security number and use it illegally for many years without you or your child even knowing it until your child goes to use his credit rating for some borrowing of his/her own.
Not too long ago the Better Business Bureau of Southern Arizona warned consumers to avoid a scam involving anyone who promises to improve a consumer's credit scores using a CPN (credit protection number).
In this announcement they stated that scammers often get SSN numbers by locating dormant one via the computer; often ones that are assigned to children. These stolen Social Security numbers are sold to others who set up phony credit accounts and then quickly run up huge amounts of debt of which they will never pay off. These thieves refer to these numbers as CPN numbers versus Social Security numbers.
These scammers like to target children because their activities will likely go unnoticed until you or your child starts receiving calls from collection firms or when years later your child attempts to your their credit rating for that student loan, first new car or even renting an apartment.
If you have children it really would be worth the expense to just constantly monitor their credit report and scores just to avoid any surprises in years to come. It is possible to report any fraudulent activity to your child's credit history and have it removed, but if can take several months to get it removed. And, the more accounts that are opened and the more items that are charged the longer it is going to take to get it cleaned up. And, in the mean time your child is unable to acquire credit for needed items.
Another Scam Involving Children
Another scam involving children's credit that has been used in recent years is for a scammer to file a tax return using another person's child as a tax decuction in order to receive a refund. Then there is a problem when the real parent also claims the child on their tax returns. This will cause a major delay on getting your refund.
Where this scam does not directly affect your child's credit file with the credit bureaus it is a red flag that someone else has your child's SSN. The worry now becomes will it be used for other scams which will affect your child's credit report and scores in a negative manner.
One more reason to consider monitoring your child's credit report on a frequent interval.
The Elderly Are Also Preyed On When It Comes To Identity Theft
This is also a group that credit scammers like to target. The older a person gets to be the less they have need for or use their credit. Therefore, it is good for people in this group to check their credit scores and history frequently.
If you have elderly parents for whom you are responsible then make it a practice to monitor their credit report and scores. It may be a desire or necessary for an older person to obtain financing for something again and you certainly don't want to find out at that point that someone else has been using their credit. In addition, this type of identity theft can really delay and complicate the settling of an estate.
A Surprise You May Find on Your Credit Report
An item that I have found people are most surprised to find when they check their credit report as a collection is a charge for an old Cable TV converter box. Many people have actually turned the boxes in but have not saved the receipt to prove that they did.
First off, be sure to turn these boxes in when you move or discontinue your service. Be aware that the Cable companies do report to the credit bureaus your failure to return them. This is a charge that may eventually show up as a collection item on your credit report and have a negative impact on your credit scores.
Second, when you do return your cable box be sure and keep the receipt as proof of your return. Keep it for years. That receipt is your only proof that you did indeed return the box. A lot of people that I know have had to pay the collection charge simply because they had no proof that they returned the box years before.
A Debt Settlement May Cost You In Taxes
Don't be surprised when your income tax due is higher than you expected because of a debt settlement you arranged with a previous creditor. The Mortgage Debt Relief Act of 2007 allows for forgiven or cancelled debt to be included as income when it comes to your income tax. You should not be fooled by the name of the act. It does not just apply to mortgage debt.
How Does Storm Damage Affect Your Credit
If you live in a state where have the potential to lose your home and belongings from a tornadoe or hurricane then picture everything you own being blown hundreds of miles from your house by these storms. People who have been involved with these kinds of losses have reported financial items such as bank statements, check books and other personal identifying paper work items having been found by people in cities or towns hundreds of miles away from their home that the storm destroyed.
Most people who find these type items are honest and will make an honest effort to locate the rightful owner and return what they have found. But, unfortunately, not everyone is honest.
If you experienced a loss like this then you should seriously consider tracking your credit report and scores for some time in order to be sure that no one is using your credit card numbers or Social Security Number to your detriment. After retrieving your credit report you would be wise to monitor it for some time just to be sure no one has found any of your personal documents and using them and negatively impacting your credit rating.
Check Your Own Credit Score and Report
Many people believe that only creditors or financial institutions are allowed to check a person's credit scores. The reason they have come to believe this is that so many companies where one has applied for credit will refuse to share the applicant's credit report information, on which they have based their approval or denial decision, with the applicant.
What is in your credit file is not some deep dark secret that you do not have access too.
Not only can you check your credit scores and view everything in your credit file it is something you should do quite frequently for all the reasons previously stated here.
Don't let a creditor or anyone else intimidate you when it comes to your credit worthiness. Go check credit report and score because your future credit approvals depend on you monitoring and maintaining your credit worthiness.
|How To Find Credit Scores
|Before you can begin to improve your credit situation you have to know where you currently stand. You need to request a copy of your credit report and fico scores so that you can review and get a basis from which to begin.
|Get Credit Scores From All Three
|All creditors do not report to all three of the credit bureaus, therefore when you request a copy of your credit report and scores then you need to do so from all three of the credit reporting agencies. This is call a tri-merge credit report.
|Credit Report Defined
|Read about what exactly a credit report is and what you can expect to find on yours. Learn more....