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Credit
Scores
A credit score
is a three digit number that sums up your credit report.
According to a recent survey, 44% of people had no idea what a
"credit score" is. Your score is important to know because companies
use your credit score when considering you for loans and other
services.
The score was created by the Fair Isaac Company, and it is based on
the likelihood that you will pay your bills. A score of 720 or higher
means that you're in great shape credit wise. The average score is
678. If your score drops below 650, you are considered "sub-prime".
Basically, the higher the score, the lower the risk... and vice versa.
Each of us has three credit scores - one for each of the three credit
bureaus: Equifax, TransUnion, and Experian. These scores determine
what type of loan or service each person gets.
If you are planning on buying a home or a car in the next few months,
you will want get all three scores. You will have to pay for them in
most cases, but the cost is worth it so you know your credit score
before you start shopping. That way, you won't allow companies to
charge you inflated rates.
Ways to Increase Your Credit Score
1. Pay your bills on time.
Payment history is the most important factor in determining your
credit score. Getting in the habit of making on-time payments is a
powerful way to start rebuilding your credit.
2. Pay down your debts - and consider charging less.
Lenders like to see plenty of room between the amount of debt you
owe and your total credit limit. The wider the gap, the better your
credit score.
3. Don't be afraid of debt consolidation.
If you are overloaded with high-interest debt and are in danger of
or already have fallen behind on your payments, consider working with
a non-profit debt consolidation company. These services can negotiate
lower interest rates and help you to pay off your bills more quickly
than you could on your own.
4. Stay away from bankruptcy.
Bankruptcy can knock 200 points or more from your credit score;
this is not good for you. Bankruptcies are reported for up to ten
years, and they make it almost impossible for you to be approved for
any type of credit or loan. If you are approved, you will likely be
charged a very high interest rate. Bankruptcy can make it difficult
for you to get life insurance and even a job. |
Education
Center
Helpful Financial Forms - Download financial forms.
Credit
Cards - Learn about important terms before applying for a
credit card.
Consumer Rights - Learn about your rights under the Fair
Credit Reporting Act.
Debt Warning Signs - Learn about the warning signs of debt.
Credit
Scores - Learn about credit scores and why they are so
important.
Telemarketing Scams - Top 10 telemarketing scams.
Money Saving Tips - Tips to help you save money.
Consumer Debt Statistics - Detailed consumer debt statistics
in the U.S.
Debt Management Plan - How debt management helps you.
Credit
Repair - How credit repair helps you.
Foreclosure Prevention - How and why to prevent foreclosure.
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