Better-Than-Subprime Credit Score
Credit scores range from 300 to 850. Exact information about a credit score is not made public, but we do know that the lowest Fico score possible is 300, with 850 being the highest.
Most lenders consider 620 as the bottom cut off for prime loans, which is the dividing line between fair and bad credit. So having a credit score a little above it may cause you to panic, say, 630. It’s still practically average, but it falls on the low side or below average. However, a 630 score is rather better than being in the “subprime”.
Such credit score would possibly be considered as a sensible credit. You won’t automatically be denied loans, but you will certainly not get the best rates. Securing loans may also be very difficult at this level. The interest rates are always pretty high and the conditions are far less than ideal.
Truth be told, if you plan on buying or refinancing a home or a brand new or used car, you’re sure to have a higher mortgage rate. So you’re better of improving your credit score.
Needless to say, the higher your can enhance your score, the better, but your score should not hit below the average before you even try to get a loan. Anything below the prime credit score is pretty much a bad credit score. Your risk of default is basically high and before a creditor even thinks of approving you a loan, you will be required many different compensating factors.
If your credit score marks a little above 620, you may have made a few financial mishaps in the past. This can happen if you own credit cards that are maxed out. Going beyond your credit limit makes it even more damaging for your credit score. When you max out several credit cards or go beyond the credit limit, you give prospective lenders the thinking that you have troubles living within your means. The money you make is not adequate, so you use your available credit to get what you want or need. This can unconstructively affect your score.
You should keep in mind that your credit score depends on all the data in your credit report, so it’s a must that you regularly monitor it.
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Categories: Credit Score Articles Tags: average credit score, better, Credit, Credit Score, Score, subprime credit score
High Credit Score
We know all too well that the higher your credit score is, the better your control is on your finances. Truth be told, you’ll experience better benefits, save money, and enjoy lower interest rates than most of the people who have lower credit scores.
If your credit score is high, creditors are more likely to back up your loan and give you the best rates possible as they believe in your borrowing skills. Suffice it to say, you should always strive hard and focus on getting your credit score as high as you possibly can.
One of the most vital things to avoid is having too many credit cards since this can give your prospective lenders the wrong idea that you can’t live within the money you can make and giving you another loan might just prevent you from meeting further obligations. The best thing to do is to limit your credit cards to three or four cards.
Also, pay your bills on time. You should have at a record of at least seven years of promptly paying your financial obligations. Most creditors don’t approve individuals applying for loans with a history of late payments. Simply put, if you plan on applying for a loan in the future, start getting in the habit of paying your bills on time.
Also, always obtain you credit report. Just so you know, you are annually entitled to a free credit report from credit bureaus such as and Equifax, Experian, and TransUnion. Check for any error or inconsistency and if there is any, immediately report them to the bureaus which will then fix it within 30 days after a thorough investigation. Save and monitor all account statements you have as some credit card companies have the tendency to raise your interest rate or drop your available credit if you are late on a payment, even if it’s not to their own company.
Start improving your financial status. With time and effort, you will definitely get that score you’ve been rooting for.
Categories: Credit Score Articles Tags: better, Credit Score, give, High Credit Score, time
What Makes Up Your Credit Score
If you don’t have any idea what goes into your credit score, you can’t do much about it. If you know what elements go into coming up with it and how it is calculated makes it possible for you to have more control over your financial status.
1. The most significant part of your credit score will have your history of making payments as a basis. This accounts for 35% of your total credit score. Then, if you have an impeccable record of prompt payments, then this is actually good news. Nevertheless, if you always forget to pay a bill, then it would be otherwise.
2. Your blend of credit makes up 10% of your score. Having a mortgage, car loan, credit card and maybe a store account that you pay on is a sign to the agencies that you can handle different credit options. See to it that you can handle all of them, though, given that not paying on time on even one type can count against you.
3. 15% of your credit score will be determined depending on how long you have had a credit history. Certainly, the better you have handled that credit in the past years, the better it will be for your score. However, it would still be better to have a more established credit record than a shorter one.
4. Second in weight to your payment history will be the total amount of your debt. This factor makes up for 30% of your score. The debt you owe is compared to your income in what is called the “debt to income” ratio. The lower it is, the better. You must target keeping your total debt at 25% or less of your annual income to have the best effect on your rating.
5. New inquiries into your credit can be an indication that you may be overextending yourself and account for 10% of your total score. The one exception will be the case wherein you are the one looking at your credit report.
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What Makes For A Credit Score
Have you ever tried getting a letter coming from your credit agency that displays your credit score and the question running through your mind is how did it come about? That’s the usual case a credit holder is experiencing when he or she sees how low their standing is.
First off, you must realize that your current credit score will rely upon your past payments. This makes up for 35% of your overall credit score. If you have been religious with your payments, then no further questions will be asked. Bad news if you have missed a couple of due dates. Different creditors have different standards when it comes to when they will be accounting a late payment. That said, it’s still best to do timely payments.
Second, the 10% of your score will be coming from your variety of credit. This would only mean having different categories like car loan, house rents or simple credit cards display your capability to handle a myriad of credit options, given you keep in mind to pay all of them.
Third thing to know is that 15 % of your credit score will be taken from how long you have a history of credits. The better you have handled them in the past years, the better your score would turn out.
Fourth, 30% comes from the overall amount of the balance you owe. It will be weighed parallel to your income. So, see to it that you make your debt lower than your income to keep your score afloat.
And of course, 10% of the credit score makes up for what you owe from inquiries with regard to your credit. This could mean an overdue or a forgotten due date.
You can trace back this mysteriously low credit score to the credit holder’s lost of control and lack of knowledge. It’s tempting to blame the credit agency for not informing you ahead, but you have to accept the fact that you’re responsible for the kind of position you are presently on.
Categories: Credit Score Articles Tags: agency, better, Credit Score, credit score criteria, different, payments
Q&A: Paying off debt to get a better rate for buying a house.?
Question by Ervin: Paying off debt to get a better rate for buying a house.?
I’m currently paying down what I owe on my credit cards. When I receive my tax refund… I plan on paying it off. March of this year I will be debt free. Will that raise my credit score? I’m asking because in a about 1.5 to 2 years I want to buy a house with good credit.
Best answer:
Answer by Toni
Using less than 30% of your available limits is what keeps the scores up.
Ex: $ 1,000 limit – never use more than $ 300 at any time during the month.
That’s why experts will tell you:
Use your card for small things you need like food or gas and pay in full each month.
Make sure you do not close those accounts when you are finished paying them off.
You want to keep payment history, and you want to keep it ongoing.
By paying in full you never pay interest and can get those top scores.
A years worth of paying in full each month should get you a pretty good rating.
Enjoy purchasing your new home someday.
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Q&A: When using a Visa debit card is it better to use it as “credit” or use a pin number and hit “debit?”
Question by Granny: When using a Visa debit card is it better to use it as “credit” or use a pin number and hit “debit?”
I’m wondering if there is better protection or lower fees with one or the other.
Best answer:
Answer by Thomas E
It’s probably BETTER to use it as a debit card.
Of course there ARE credit card fees; as a matter of fact, I read the other day that some “mom-and-pop” gas stations have stopped allowing the use of credit cards to pay for gasoline for that very reason – the fees eat into their profits. The people who sell gasoline actually make very little profit (maybe 12 cents per gallon), and the credit card companies base their fees on the total sale, so, since gasoline costs so much now, the fees can run as high as 10 cents per gallon, leaving very little profit. By the time gasoline hits the retailer, big oil has already gleaned all the profit, but that’s another story.
On the other hand: Use it as a debit card, and I think that the bank takes some fees; although I am not sure of that, it makes sense to me that that would be the case, since banks also are very greedy when it comes to “fees”.
Either way, though: If it works like mine does, the money is deducted from your account immediately, so at least YOU don’t have to worry about a credit card bill. And YOU will not be charged any fees either way – only the merchant.
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Q&A: When you pay an over-due/write-off item, how long does that (lack of a better term) “bad credit” stay on file?
Question by Bronzed: When you pay an over-due/write-off item, how long does that (lack of a better term) “bad credit” stay on file?
When I was 18 I started getting credit cards and loans, and due to youth, ignorance and inexperience I missed several payments and I believe I even have a certain card “written-off” for the amount of $ 3. Now that I make good money, I’ve accessed my credit report to pay off all fees and late items. How long will those negative marks stay on my file? I’ve heard “7 years,” I’ve heard “a few months to one year.” Obviously I am now older and wiser and wish to have- and maintain- good credit. If bad marks are on my credit report for several years, is there any way to expedite the process of having them permanently removed? Thanks!
Best answer:
Answer by TRAC
Generally, 7 years. If you pay on an item, it (according to what I’ve been told) “restarts the clock”. If you can pay something off in one lump sum, that’s best. If it’s going to be on the credit anyway, it’s better to have it paid, albeit late, than not paid at all.
I’m in the process of repairing my credit. I’ve had some charge offs as well, those close to being removed I don’t worry with. However, if something has a ways to go, I’ll pay off one at a time until they are all paid. If nothing else, it shows some effort to repair and while some creditors don’t even care about that, others will.
Good luck.
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