Credit Rating
Credit rating can affect whether you get a loan or
not.
Credit ratings can affect whether or not you get a loan, a
credit card, an apartment, or even a job. They affect the
amount of money you can borrow, how much time you have to pay
it back, and how much interest you will pay. You insurance
rates may be partially based on your credit rating.
A credit score is a number between 300 and 850 that tells the
inquiring party how well you pay back your debts. Higher scores
are better. Three major credit bureaus, Equifax, Experian, and
Trans-Union, collect your financial data and create your score
based on their own criteria. Since the three credit ratings, or
FICO scores, may differ, sometimes they are averaged into a
composite score.
Many sources of your financial data do not report your
information, or report limited or inaccurate
information. Some companies like Capital One consider a
client's credit limit private information, but by not reporting
this detail to the credit bureaus, they may cause a person's
credit rating to be artificially lowered. Some smaller
financial institutions only report late payments and
overdrafts, which is harmful to those with responsible
histories. Ask your lenders, your landlord, your insurance
company, and any other potential credit reporting source about
their reporting policies.
To improve your credit ratings, pay your debts
down. It's best to decrease open balances in relation to
available credit. Closing a seldom-used credit card account may
actually hurt your ratings because you are suddenly borrowing a
greater percentage of your available credit. Don't apply for
more credit unless you need it.
Too many credit card credit checks will reduce your
credit rating. Seek credit counseling, if necessary. It
will not hurt your credit ratings, although the occasional
lender may be concerned. Always pay on time. This establishes
excellent repayment history.
Request a free copy of your credit ratings from http://www.annualcreditreport.com or
1-877-322-8228. Report any inaccuracies to the reporting
sources as well as the credit bureaus. Sometimes there is
merely a clerical error, and sometimes you might be able to
resolve a lingering financial issue.
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