All about your Credit Score

For the next few weeks I'll be posting blogs focussed on helping you better understand your credit report, credit score and providing you with tips and tools to help you improve your credit health.

I figure you need to understand the makeup of a thing before you can even begin to work on it.  To that end, this post is all about the basics of your score.

What are the minimum requirements for a credit score?

You must have the following in order for the credit bureau to figure your credit score:

At least one account that has been open for six months or more
At least one undisputed account that has been reported to the credit bureau within the past six months
No indication of deceased on the credit report (Please note: if you share an account with another person this may affect you if the other account holder is reported deceased).

Your score only looks at information in your credit report

Payment history (35%)

• Pay your bills on time.
• Get current with missed payments.
• Understand that paying off or closing a delinquent won't remove it from your report.
• Contact your creditors or a credit counselor if you're having trouble.

Amounts owed (30%) 

• Keep balances low.
• Pay off debt rather then moving it around.
• Don't close unused credit cards.
• Don't open unneeded credit accounts.

Length of credit history (15%)

Depending on how the rest of your credit report looks, having a longer credit history will increase your credit score.

• how long your credit accounts have been established, including the age of your oldest account, the age of your newest account and an average age of all your accounts
• how long specific credit accounts have been established
• how long it has been since you used certain accounts

Types of credit in use (10%)

• Apply for and open only need accounts.
• Manage your debt responsibly.
• Remember that closing an account doesn't make it go away.

New credit (10%)

• Shop for a loan within a focused period of time.
• Re-establish your credit history if you've had problems.
• Check your credit report.
• Don't open new accounts too quickly if you're new to credit

Use the below infographic to help you get started on giving your credit score a tune-up, whether your credit is already pretty good, or needs a serious makeover.

Credit Score Makeover: How to Get a High Score from the Credit Bureaus by Credit-Land.com

Leave a comment. Let me know if this was helpful.

sources:
myfico.com
credit-land.com

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Posted in: Credit score

How to Check your Credit Report and Credit Score for free

Getting where you want in life is a financial process: you make, you spend, you borrow. The truly successful make sure how they borrow is part of achieving their goals.

Your credit history is your financial DNA. The importance of good credit cannot be underestimated, more employers are reviewing credit reports of perspective employees. Insurance companies review your credit report when you apply to insure you home and/or car. And without good credit it is very difficult to obtain a credit card. Many businesses today prefer to use credit cards and many employment fields, such as financial services, gaming, military and law enforcement, continually monitor their employees’ credit reports. If you are thinking about buying a house, a car or simply applying for a new credit card, your credit report represents the first step in the lenders decision making process. The fact of the matter is, you need to have a good credit history in order to get credit.  
What is a credit report?

Your credit report is a simple snapshot of your financial choices, your habits, and yes, your future credentials.
When you make a payment on a credit card or loan, the company that gave you the loan or credit keeps a record of how much and often you pay. Those companies and other sources also report your credit, loan and payment history to one or more credit reporting companies. The credit reporting companies combine the information from your different credit, loan and payment reports into a single credit file.  Three nationwide companies prepare credit files for people in the U.S.: Equifax, Experian, and TransUnion.
 
What is good credit?
Simply put a person with good credit has a well established history of having paid their accounts on time.

What information is actually included in your credit report?
A typical credit report includes four types of information; identifying information, public record, credit information and inquiries. You should review your credit report at least once a year. You are entitled to one free report from each of the bureaus every 12 months from www.annualcreditreport.com or by phone at 877-322-8228.

Manage your credit well — get good rates and know when you’ve reached a smart limit.The first step? Know your credit information and what it says about you — and your borrowing and financing power.

How do you get a copy of your credit report for free?

To get a 100% free copy of your credit report go to www.annualcreditreport.com enter your name, address, date of birth, and Social Security Number to get a copy from each of the three monitoring bureaus.

Monitoring your credit is like having regular check-ups at the doctor. You don't want to find out that something's wrong when it's already too late, right?

How to get your credit score for free?

A credit score is the result of a mathematical formula that uses the information in your credit file, such as how well you have paid your bills in the past, to calculate how likely you are to pay your bills in the future. Your credit score is your financial report card.

Sign up for a free account at www.credit.com.  Credit.com can help you see where you stand for free and make credit decisions you feel good about!  You can get your free credit score every 30 days. The site also provides advice to your advantage.  This site can be useful, helping you Know your best options BEFORE you apply for a loan , credit card, etc.  You'll get two measures of your credit score, plus a report card that tells you how you're doing in the five key areas that make up your report.

A great credit score can save you HUNDREDS, if not THOUSANDS of dollars over the course of a year. Lenders use your score to make decisions about loans, credit, and ultimately, interest rates. Your credit score is the key: know it, manage it, and put it to work for you.

A picture is worth a thousand words.  Here are some basic steps anyone can take to build their credit score.

Explore more infographics like this one on the web's largest information design community - Visually.

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Posted in: Credit Report , Credit score