Factors That Affect Credit Score, How to Improve It

If you are planning to purchase something and your interest rates matter, then knowing your credit score is very important. If you have good credit score, then you might be charged a lower interest rate. On the other hand, if you have bad credit score, then you will more likely be charged a higher interest rate.

Your good credit score indicates you pay bills on time and can handle money wisely. As a result, the lender will think that you will be responsible in paying the loan and you might be asked to pay for a lower interest rate.

However, your bad credit score indicates you make overdue payments, or not at all, and you are careless in handling money. Consequently, the lender will be doubtful of your payment ability and you will more likely be asked to pay for a higher interest rate in order to compensate for the risk.

Paying your bills on time will certainly increase your credit score. Your credit score is one of the most significant information in your credit report.

Another factor that affects your credit score is your total number of loans in relation to your credit limit. For instance, if your loans almost near your limit, then your credit score will be lower.

The best approach to improve your credit score is to make on time payments. Do whatever it takes to pay your bills on time and make it your first priority. It will eventually increase your credit score and in turn, you might be charged a lower interest rate.

Do not believe credit repair scams who force you to pay immediately and promise they will increase your credit score and remove negative information in your credit report. In fact, negative information cannot be removed if it is correct. Otherwise, only you can correct the negative information.

You can request for your free credit report annually from the three credit reporting bureaus, Equifax, Experian, and TransUnion. If someone asks if you want your credit score, you will be charged $10 or $15 if you say yes.

Credit Cards for Poor Credit, are Here Again

The United States has suffered from a recession that had a huge effect not only on the automobile industry and financial intermediaries, but to the majority of its population as well. It does not stop there, because as American citizens felt the hit of high prices for basic necessities and goods, the international market followed suit. Not only were the citizens of the United States forced into bad credit and bankruptcy, financial institutions also had their fists tightened in lending to people with not so good credit.

Sad to say, the problem does not stop there. Credit loans, mortgages, and student financial aids were not the only problems that faced the nations’ citizens. The government had a hard time monitoring the flow of American dollars in the lending industry because of the massive unemployment that occurred.

This led to the struggle of other businesses and companies to get back on their feet without depending on loans or mortgages. Some of the measure that they took was to lessen wages and cut off workers, making it difficult for Americans to pay for their due liabilities and bills.

As many citizens were falling low in their credit standing, banks had to stop lending to clients to save their company from collapsing. But the trend is starting to return to normal nowadays as more and more credit companies are offering their services to clients, even if they have a less spectacular credit record.

But of course, the deal these companies offer to their customers for subprime is very different. They are less convenient for the clients, but are helpful in getting them back on track. In fact, there has been a 41% increase in the ratio of credit cards issued to clients with poor credit.

Banks saw the need to widen their scale of customers and realized the subprime lending business to be profitable.

Credit Card Options for Those with Bad Credit

Many credit scores by customers have suffered because of their bad credit history, especially if they have once filed a Chapter 7 or a Chapter 13 bankruptcy or have several unpaid debts still intact. But this does not mark the end for you. If you are suffering from financial crisis, getting back on your feet may be possible with a secure credit card.

CNN has recently released a full list of the best cards that are offered especially for people with bad credit background, but here are the three that stands out for those who want to rehabilitate their credit record fast:

The Secured MasterCard offered by Capital One

Though a yearly fee of $29 dollars would be charged to avail this card, it has a feature that enables clients to have control over their cash deposits. Furthermore, the higher your deposit is the higher credit you get back. Example, a customer can get as much as $200 in credit for repaying a $49 loan. You can get up to $3,000 in credit for maximum a deposit that is very good for your APR that comes with it which is very good for a secured credit card.

The Orchard Bank’s HSBC cards

Clients will be offered one among three different cards depending on their credit records. An Unsecured credit card comes with yearly dues of $39 to $59 and APR reaching from 14.99% up to 24.99%. The secured credit card on the other hand, imposes a $200 minimum in deposits and a yearly fee of $35 with a low 7.99% APR.

The USAA Secured Credit Card

This can only be acquired with persons who are members of the military troops and their relatives. It imposes a $250 minimal cash deposit. Not only that, you will be given a CD by the company for two years which would make you earn from your money deposits,

How to Restore Your Credit in Just 5 Easy Steps?

Bad credit prevents you from applying for the loans you need such as a student financial loan, or one for an automobile. It even prevents you from getting that homey apartment you have been vying for, sometimes, it even disqualifies you to get services from water and electricity companies not to mention get a landline phone at home.

So what can you to change all this to your advantage? Well, that is as simple as 1 to 5.

First, always ask for a free copy of your credit statement after every year. It is available in Equifax, Experian and TransUnion, you can also get the copy online in this website: www.annualcreditreport.com.

Second, you have to know how to read and interpret your credit reports. This will make you come up with better financial choices and help you spend your money more wisely. These reports include your personal info such as the history of all your recent expenses, how much dues you still have and how many loans you took, and if ever you filed for a chapter 7 or a chapter 13 bankruptcy.

Third, double check your report for they sometimes contain errors which often become the reason for a person’s bad credit. Check for typos, or a debt you have recently paid but the company failed to record. Once you find an error, the company will have to conduct an investigation that would often last for a month and would correct their mistake. Always call the agency that provided the wrong information, and finally, ask for a revised copy of your credit statement.

Fourth, do not procrastinate, pay on time. This is very crucial for it will determine how you responsible you are for the agency. But there are other things that might affect your credit status: applying to too many credit accounts will not look so good for your credit score. Do not pay over your limit, it is wise to just stay a little below them. Pay regularly to lessen your debts.

Finally, seek help from the experts. Learn how to create a budget if the amount of debt that you have is beyond your capacity to pay, it is smart to seek help from a credit counselor. They will help you learn the basic knowledge you need to get out of your sticky situation in the present.

Fair Credit May Not Qualify for a Loan

The cloud of economic crisis that hovers above the United States which has been forcing the country to struggle is starting to lift. However, as credit card offers are starting to get back to normal, there are still several credit companies who are hesitant to offer full-fledged credit cards to consumers.

Before the recession that the country suffered in 2008, the country’s financial intermediaries that offered loans to people with poor credit were of abundance and even intermediaries who focused on clients with high scored credits were lowering their standards to fit more customers. This is according to Ben Woolsey the marketing director of Creditcards.com.

Currently though, the trend is not the same, this leaves people who have average score stuck in the middle of the industry. This makes it a little more difficult for these clients to get the loans they need compared to people with bad credit and people with perfect credit.

Though the financial intermediaries have gone back to giving to people with less than superb credit standing, they are not investing their resources for those with fair credit.

Credit companies share their hesitance in giving loans to average scored customers; this is due to the fact that their willingness to pay is doubtful. The past experience during the recession with these borrowers has led to the decision of the lenders not to entertain them anymore.

The lending business is not much of a competition among banks or financial intermediaries, more and more lenders are quitting the fair credit market. Each company have their own definitions of fair scored consumers.

Some consider getting a FICO score of 620 to 659 fair while for others the range is between 620 to 720. When the market is this strict in recovering from loses and securing that they gain from their transactions, indeed it is going to be the consumer who will have to prove their capacity or their willingness to pay their loans.