10 THINGS EVERYONE SHOULD KNOW ABOUT CREDIT SCORES
There are more than just 10 things you should
know about credit scores but here’s what
we will deal with with for now.
1. CREDIT REPORTS ARE DIFFERENT FROM
Credit scores are calculated using the
information on your credit reports,
which includes details of your credit
accounts, how often you apply for credit,
debt collection accounts and some public
records, among other things.
2. YOUR SCORES ARE BASED ON 5
Those factors are (in order of importance)
payment history, credit utilization, average
credit age, account mix and inquiries. You
can find a more detailed explanation of each of those factors here.
3. CHECKING YOUR OWN SCORE WON’T HURT IT
Only hard inquiries when a lender looks at your
credit when you apply for a loan or credit card have
a negative impact on your scores, and the effect is
small and temporary.
4. YOU CAN GET YOUR SCORES & REPORTS FOR FREE
You’re legally entitled to a free copy of your credit report from each of the three major credit reporting agencies: Equifax, Experian and TransUnion.
5. THERE ARE MANY DIFFERENT SCORES & THERE ARE DIFFERENT CREDIT SCORE RANGES, TOO
When you’re trying to figure out where you
stand or if your credit is improving, make
sure you are comparing the exact same score
and that you know the range
wherever you’re getting the score from
should tell you that information. For example,
a 750 in another scoring model.
6. YOUR CREDIT CAN HELP YOU SPOT FRAUD
If someone runs up a large credit card bill or takes out credit in your name, it will show up on your credit report and affect your credit score. Watch your score for changes you did not anticipate
7. YOUR CREDIT SCORE CAN COST YOU THOUSANDS OVER A LIFETIME
A low credit score means you’ll probably have to pay higher interest rates on things like credit card balances and mortgages.
8. JOINT ACCOUNTS AFFECT YOUR CREDIT SCORES, BUT THERE AREN’T JOINT SCORES
If you open a loan or credit card with a partner,
the account activity will be reflected on both
your credit reports. Joint accounts are
different than authorized users, but whenever
you share credit, make sure you’re aware of who
will be responsible and who will be affected if a
payment is missed.
9. NEGATIVE INFORMATION EVENTUALLY AGES OFF
Different kinds of negative information will
remain on your credit report for different
periods of time (bankruptcy is an exception
to this, for example), but generally, negative
information ages off your report and no longer
affects your score after 7 years.
10. CREDIT SCORES AREN’T THE ONLY THINGS THAT MATTER FOR LENDING DECISIONS
A credit score isn’t the only thing lenders consider
when reviewing applicants.
If you have no credit or poor credit, you may be
able to secure a loan through an alternative lender,
and in some situations, making a personal appeal or
giving a lender more context to your credit report can
help you access financial products.
A WORD OF CAUTION ABOUT TRAILING INTEREST
Trailing interest is the amount of interest that adds up between when a credit card bill is sent and when payment is received.
It is also called Residual Interest.. It only applies when you carry a balance on your credit card
How do you get credit when no one wants to give it to you?
Why Its Important to know your score
To improve your score,
To apply for a credit card
To apply for a mortgage,
To apply for a rental To apply for a car loan,
To apply for a personal loan
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