Top Four Credit History Blunders

Source : http://www.creditorweb.com/ permits to republish here


You can’t turn around without someone telling you this or that about the importance of your credit score. Unfortunately, they’re all correct. You credit score has the power to help you get a small loan for your business, or a mortgage for a house, but only if you’ve managed your finances in such a way that your credit score is favorable.
So you want to do everything in your power to keep your financial record clean.
Many different factors go into your credit score, but these are some of the biggest mistakes you won’t want to take to the bank.


Don’t max out your credit card.
Easier said than done, you might say, but it’s essential.
If you’re using the majority of your available limit on any given card, or on more than one card, it tells banks and lenders that you’re living off of your credit cards, and unlikely to be able to pay them back.
Ideally, you should never carry more than 30% of your available limit on any credit card.


Don’t make late payments.
Again, easier said than done, but promptness counts big on your credit score.
Not only can late payment allow your credit card company to jack up your APR and slap you with penalty fees, but it also puts your financial responsibility in question.
Future lenders don’t want to take a gamble on someone who has a history of missing payments.
Keep on top of your payments, and you will be establishing yourself as a financially responsible person who they will feel confident lending to when it matters.


Don’t give up on your credit score.
People sometimes think that once they’ve missed a payment on their credit card, their credit score is already toast, so they may as well just keep missing them, or worse, not pay them back at all.
They couldn’t be more wrong.
When it comes to late payments, the details matter.
People who will be evaluating your credit care how frequently your payments were late, and how long you let them go.
Missing a payment by two days once is different from missing it by two days every month, and missing your payment by a week is different from not paying it for two months.
And even if you have a blemish like this on your credit history, all hope isn’t lost.
If you can practice good money-management for an extended period of time after your payment hiccup, lenders will look more favorably on you.
They care the most about the last two years, so don’t mope around thinking that a missed payment from a decade ago is going to lose you your mortgage.


Don’t use a card that doesn’t report to the credit bureaus.
Many people don’t realize it, but not all lenders report to the institutions tallying up your credit score.
You might think this would be a good thing—after all, if they aren’t reporting, any bad behavior with this card won’t be factored into your credit score, right? Wrong.
Even though these cards won’t report any card practices that would work in your favor, any problems that go to collections will work against you.
This is the worst of both worlds. These credit cards can harm your credit score, but they will never improve it, not matter how responsibly you use it.
Whenever you sign up for a new credit card, read the fine print and find out whether or not your lender reports to the credit bureaus. If you aren’t sure, simply ask one of the lender’s employees.

This article is courtesy of CreditorWeb.com, where you can compare business credit card offers and apply for credit cards online..


Click ref : Credit Score ( CreditReport .com & ScoreDirct ) --- Credit Repair --- Payday Loan/Mortgage/Grants ( 100 day loan & Cash in 24 hours )

Rebuilding Your Credit History

Source : http://www.creditorweb.com/ permits to republish here.


Your credit history is very important for you because when it comes
to big loans your credit report will determine if you can get the loan
and what rates you’ll have to pay. The credit report will matter a lot
when you apply for a mortgage loan, for a car loan or for getting
insurance on your house, your car or your life. If your credit report
does not look so good it is possible that you’ll not get the loan or
insurance or if you get it the interest will be higher than normal
because you represent a risk for the loaner. On the other hand, if your
credit report has a good score it will be much easier for you to obtain
the necessary loan or insurance and the interest rates will be much
smaller. In case you think that you fit into the first category, people
with a bad credit report, rebuilding your credit history should be a
top priority for you. I said a top priority because rebuilding your
credit history is a difficult and long process that will take you
several years but at the end you’ll be satisfied because then you’ll be
able to get any credit you need.


Having a poor credit history will bring you only disadvantages: will
be harder for you to get a loan or if you manage to qualify for a loan
the interest rates will most probably be much higher. Apart from this
loan connected disadvantages you’ll also face other problems like: you
might be turned down for a job or, worse, you’ll not be able to rent an
apartment. If you have faced this type of problems you already know how
important is to start rebuilding your credit history as early as
possible.


As we already mentioned, repairing or rebuilding your credit history
is a scary but necessary task for people with bad credit reports. For
starting you need to know how your credit report looks like and what
lenders will see when they ask for your credit report. You can get your
report for free from http://www.annualcreditreport.com/
. This is a true free credit report site set up by the US Government to
provide consumers access to their credit information once per year,
free of charge.  Study it and look at it from the perspective of a
lender. This way will sooner realize what your mistakes are and try to
repair them and make sure you don’t repeat them. The next step would be
to make a list of all your income sources, fixed expenses like mortgage
or rent or car payments, and variable expenses like clothing or holiday
expenses. Writing them down will help you a lot because you’ll see your
spending patterns and all your sources of income all together. This
will help you better understand and see what changes should be done in
order to save some money.


The next step on the way to rebuilding your credit history is
applying for a credit card.  If you can not get approved for a
standard credit card, apply for a secured credit cards.  Although
standard credit cards are best for rebuilding your credit score,
secured credit cards are much easier to obtain and can be a beneficial
first step. To be able to get a secured credit card you need to have
and deposit some funds with the credit card issuer. Your secured credit
card limit is usually equal to the amount you deposited. This is very
helpful because you are able to know from before how much you’ll spend
and you are not allowed spending more then the credit limit. A secured
card can be used the same way as an unsecured card and making your
payments in time will be of big help for improving your credit report.
Apart from a secured credit card you can apply for a store or gasoline
card which is much easier to obtain, have a smaller credit limit and
will help you improve your credit report. For the same purpose you can
also establish an account at a credit union and later apply for a
secured loan. The interest fee for this type of loan is small, but if
you make your payments in time the positive information will be added
to your credit report.


If you want to succeed in rebuilding your credit history the most
important thing to do is paying your current bills on time and in full.
This will put positive information onto your credit report. For
maintaining your credit history in good order, get copies of it
annually from more than one source (in case creditors do not report to
all credit report agencies) and review it. If you discover any mistakes
or errors correct them at once by contacting in writing the credit
reporting agency and the creditor.


These are only few ideas on what to do for rebuilding your credit
history. If your not confident you can manage all by yourself ask for
the help of an expert. They main key to succeed in keeping your credit
history clean is paying on time and in full all your bills.

This article is courtesy of CreditorWeb.com, where you can compare business credit card offers and apply for credit cards online.

 Click ref : Credit Score --- Credit Repair --- Payday Loan/Mortgage/Grants

Credit History / Report - Wikipedia

<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<
Souce : Wikipedia permits to republish here at based on restrictions Creative Commons Attribution-ShareAlike License  and http://creativecommons.org/licenses/by-sa/3.0/ Contents in wikipedia is frequently revised and I endeaver to put in the latest version here.
But I suggest you visit them frequently just in case.

<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

 From Wikipedia, the free encyclopedia
Jump to: navigation, search

This article deals with the general concept of the term credit history. For detailed information about the same topic in the United States, see Credit score (United States).

Credit history or credit report is, in many countries, a record of an individual's or company's past borrowing and repaying, including information about late payments and bankruptcy. The term "credit reputation" can either be used synonymous to credit history or to credit score.


In the U.S., when a customer fills out an application for credit from a bank, store or credit card company, their information is forwarded to a credit bureau. The credit bureau matches the name, address and other identifying information on the credit applicant with information retained by the bureau in its files.That's why it's very important for creditors, lenders and others to provide accurate data to credit bureaus. ^[1]


This information is used by lenders such as credit card companies to determine an individual's credit worthiness; that is, determining an individual's willingness to repay a debt. The willingness to repay a debt is indicated by how timely past payments have been made to other lenders. Lenders like to see consumer debt obligations paid on a monthly basis.


There has been much discussion over the accuracy of the data in consumer reports. However, the only scientifically researched studies that include sample sizes large enough to be valid have generally concluded the data in credit reports is very accurate. ^{[2] [3]} The credit bureaus point to their own study of 52 million credit reports to highlight that the data in reports is very accurate. The Consumer Data Industry Association testified before Congress that less than two percent of those reports that resulted in a consumer dispute had data deleted because it was in error.^[4]


If a consumer disputes some information in a credit report, the credit bureau has 30 days to verify the data. Over 70 percent of these consumer disputes are resolved within 14 days and then the consumer is notified of the resolution.^[4] The Federal Trade Commission states that one large credit bureau notes 95 percent of those who dispute an item seem satisfied with the outcome.^[5]


The other factor in determining whether a lender will provide a consumer credit or a loan is dependent on income. The higher the income, all other things being equal, the more credit the consumer can access. However, lenders make credit granting decisions based on both ability to repay a debt (income) and willingness (the credit report) as indicated in the past payment history.


These factors help lenders determine whether to extend credit, and on what terms. With the adoption of risk-based pricing on almost all lending in the financial services industry, this report has become even more important since it is usually the sole element used to choose the annual percentage rate (APR), grace period and other contractual obligations of the credit card or loan.

Contents [hide] 1 Calculating a credit rating 2 Acquiring and understanding credit reports and scores 3 Credit history of immigrants 4 Adverse credit 5 Consequences 6 More than One Credit History Per Person 7 See also 8 References

Calculating a credit rating

Credit ratings vary from scoring model to scoring model, but in general the FICO scoring system is the standard in U.S., Canada and other global areas. The factors are similar and may include:

• Payment history (35% contribution on the FICO scale) - A record of negative information can lower a consumer's credit rating or score. In general risk scoring systems look for any of the following negative events; charge offs, collections, late payments, repossessions, foreclosures, settlements, bankruptcies, liens, and judgements. Within this category FICO considers the severity of the negative item, the age of the negative items and the prevalence of negative items. Newer is worse than older. More severe is worse than less severe. And, many is worse than few.
• Debt (30% contribution on the FICO score) - This category considers the amount and type of debt carried by a consumer as reflected on their credit reports. There are three types of debt considered.

• Revolving debt - This is credit card debt, retail card debt and some petroleum cards. And while home equity lines of credit have revolving terms the bulk of debt considered is true unsecured revolving debt incurred on plastic. The most important measurement from this category is called "Revolving Utilization", which is the relationship between the consumer's aggregate credit card balances and the available credit card limits, also called "open to buy." This is expressed as a percentage and is calculated by dividing the aggregate credit card balances by the aggregate credit limits and multiplying the result by 100, thus yielding the utilization percentage. The higher that percentage the lower your score will likely be. This is why closing credit cards is generally not a good idea for someone trying to improve their credit scores. Closing one or more credit card accounts will reduce your total available credit limits and likely increase the utilization percentage unless the cardholder reduces their balances at the same pace.
• Installment debt - This is debt where there is a fixed payment for a fixed period of time. An auto loan is a good example as you're generally making the same payment for 36, 48, or 60 months. While installment debt is considered in risk scoring systems it is a distant second in its important behind the revolving credit card debt. Installment debt is generally secured by an asset like a car, home, or boat. As such, consumers will use extraordinary efforts to make their payments so their asset isn't repossessed by the lender for non-payment.
• Open debt - This is the least common type of debt. This is debt that must be paid in full each month. An example is any one of the variety of credit cards that are "pay in full" products. The American Express Green card is a common example. Open debt is treated like revolving credit card debt in older version of the FICO scoring system but is excluded from the revolving utilization calculation in newer versions.

• Time in file (Credit File Age) (15% contribution on the FICO scale) - The older your credit report the more stable it is, in general. As such, your score should benefit from an old credit report. This "age" is determined two ways; the age of your credit file and the average age of the accounts on your credit file. The age of your credit file is determined by the oldest account's "date opened", which sets the age of the credit file. The average age is set by averaging the age of every account on the credit report, whether open or closed.
• Account Diversity (10% contribution on the FICO scale) - Your credit score will benefit by having a diverse set of account types on your credit file. Having experience across multiple account types (installment, revolving, auto, mortgage, cards, etc) is generally a good thing for your scores because you're proving the ability to manage different account types.
• The Search for New Credit (Credit inquiries) (10% contribution on the FICO scale) – An inquiry is noted every time a company requests some information from a consumer's credit file. There are several kinds of inquiries that may or may not affect one's credit score. Inquiries that have no effect on the creditworthiness of a consumer (also known as "soft inquiries"), which remain on your credit reports for 6 months and are never visible to lenders or credit scoring models, are:
  • Prescreening inquiries where a credit bureau may sell a person's contact information to an institution that issues credit cards, loans and insurance based on certain criteria that the lender has established.
  • A creditor also checks its customers' credit files periodically. This is referred to as Account Management, Account Maintenance or Account Review.
  • A credit counseling agency, with the client's permission, can obtain a client's credit report with no adverse action.
  • A consumer can check his or her own credit report without impacting creditworthiness. This is referred to as a "consumer disclosure" inquiry.
  • Employment screening inquiries
  • Insurance related inquiries
  • Utility related inquiries
• Inquiries that can have an effect on the creditworthiness of a consumer, and are visible to lenders and credit scoring models, (also known as "hard inquiries") are made by lenders when consumers are seeking credit or a loan, in connection with permissible purpose. Lenders, when granted a permissible purpose, as defined by the Fair Credit Reporting Act, can "pull" a consumer file for the purposes of extending credit to a consumer. Hard inquiries can, but don't always, affect the borrower's credit score. Keeping credit inquiries to a minimum can help a person's credit rating. A lender may perceive many inquiries over a short period of time on a person's report as a signal that the person is in financial difficulty, and may consider that person a poor credit risk.

• 35% - Payment History: Negative information.
• 30% - Debt: How much and what type?
• 15% - Length Of Credit History: This is how long you've had credit
• 10% - Credit Diversity: This is the different types of credit experience you've had
• 10% - Inquiries (hard): This is when a creditor checks your credit report

Acquiring and understanding credit reports and scores

There are many businesses that aim to make money by providing services to consumers to check their credit reports and confirm the information in them. These companies advertise heavily. In the US, the Fair Credit Reporting Act and its amendments require that any national consumer credit reporting agency (including Experian, Equifax, and TransUnion) and any national specialty consumer reporting agency (including Innovis, PRBC, Teletrack) provide a free copy of the credit reports for any consumer who requests it, once per year. Free annual credit reports for Experian, Equifax and TransUnion may be requested at https://www.annualcreditreport.com. Note that many imposter websites with names similar to www.annualcreditreport.com exist, and users will see promotions for extra credit-checking services that cost money. Carefully following the process and declining for-pay services will allow users to get their free annual credit reports. Also note that the free reports do not include the consumer's credit score. Rather, they provide a list of accounts so users can confirm that no erroneous information is on the reports.


Information from the GSA Federal Citizen Information Center (US government) is available for free download in .pdf form at http://www.pueblo.gsa.gov. Look for the pamphlets "Building a Better Credit Report" and "Your Credit Scores."


Free information about understanding one's credit report and credit score is also available from MoneyWi$e, a non-profit partnership between Consumer Action and Capital One, at http://www.money-wise.org.


The government of Canada offers a free publication called Understanding Your Credit Report and Credit Score. This publication provides sample credit report and credit score documents with explanations of the notations and codes that are used. It also contains general information on how to build or improve credit history, and how to check for signs that identity theft has occurred. The publication is available online through http://www.fcac.gc.ca, the site of the Financial Consumer Agency of Canada. Paper copies can also be ordered at no charge for residents of Canada.

Credit history of immigrants

Credit history usually applies to only one country. Even within the same credit card network, information is not shared between different countries. For example, if a person has been living in Canada for many years and then moves to the United States, when they apply for credit cards or a mortgage in the U.S., they would usually not be approved because of a lack of credit history, even if they had an excellent credit rating in their home country and even if they had a very high salary in their home country.


An immigrant must establish a credit history from scratch in the new country. Therefore, it is usually very difficult for immigrants to obtain credit cards and mortgages until after they have worked in the new country with a stable income for several years.


Some credit card companies (e.g. American Express) can transfer credit cards from one country to another and this way help starting a credit history.

Adverse credit

Adverse credit history, also called sub-prime credit history, non-status credit history, impaired credit history, poor credit history, and bad credit history, is a negative credit rating.


A negative credit rating is often considered undesirable to lenders and other extenders of credit for the purposes of loaning money or capital.^[6]


In the U.S., a consumer's credit history is compiled by consumer reporting agencies or credit bureaus. The data reported to these agencies are primarily provided to them by creditors and includes detailed records of the relationship a person has with the lender. Detailed account information, including payment history, credit limits, high and low balances, and any aggressive actions taken to recover overdue debts, are all reported regularly (usually monthly). This information is reviewed by a lender to determine whether to approve a loan and on what terms.


As credit became more popular, it became more difficult for lenders to evaluate and approve credit card and loan applications in a timely and efficient manner. To address this issue, credit scoring was adopted.^{[citation needed]}A benefit of scoring was that it made credit available to more consumers and at less cost.^[7]


Credit scoring is the process of using a proprietary mathematical algorithm to create a numerical value that describes an applicant's overall creditworthiness. Scores, frequently based on numbers (ranging from 300–850 for consumers in the United States), statistically analyze a credit history, in comparison to other debtors, and gauge the magnitude of financial risk. Since lending money to a person or company is a risk, credit scoring offers a standardized way for lenders to assess that risk rapidly and "without prejudice."^{[citation needed]} All credit bureaus also offer credit scoring as a supplemental service.


Credit scores assess the likelihood that a borrower will repay a loan or other credit obligation. The higher the score, the better the credit history and the higher the probability that the loan will be repaid on time. When creditors report an excessive number of late payments, or trouble with collecting payments, the score suffers. Similarly, when adverse judgments and collection agency activity are reported, the score decreases even more. Repeated delinquencies or public record entries can lower the score and trigger what is called a negative credit rating or adverse credit history.


Your credit score is a number calculated from factors such as the amount of credit outstanding versus how much you owe, your past ability to pay all your bills on time, how long you've had credit, types of credit used and number of inquiries. The three major consumer reporting agencies, Equifax, Experian and TransUnion all sell credit scores to lenders. Fair Isaac is one of the major developers of credit scores used by these consumer reporting agencies. The complete way in which your FICO score is calculated is complex. One of the factors in your Fico score is credit checks on your credit history. When a lender requests a credit score, it can cause a small drop in the credit score.^[8][9] That is because, as stated above, a number of inquiries over a relatively short period of time can indicate the consumer is in a financially difficult situation.

Consequences

The information in a credit report is sold by credit agencies to organizations that are considering whether to offer credit to individuals or companies. It is also available to other entities with a "permissible purpose", as defined by the Fair Credit Reporting Act. The consequence of a negative credit rating is typically a reduction in the likelihood that a lender will approve an application for credit under favorable terms, if at all. Interest rates on loans are significantly affected by credit history; the higher the credit rating, lower the interest while the lower the credit rating, the higher the interest. The increased interest is used to offset the higher rate of default within the low credit rating group of individuals.


In the United States insurance, housing, and employment can be denied based on a negative credit rating.


Note that it is not the credit reporting agencies that decide whether a credit history is "adverse." It is the individual lender or creditor which makes that decision, each lender has its own policy on what scores fall within their guidelines. The specific scores that fall within a lender's guidelines are most often NOT disclosed to the applicant due to competitive reasons. In the United States, a creditor is required to give the reasons for denying credit to an applicant immediately and must also provide the name and address of the credit reporting agency who provided data that was used to make the decision.

More than One Credit History Per Person

In some countries, people can have more than one credit history. For example, in Canada, although most Canadians are not aware of it, every person who applied for credit before obtaining a Social Insurance Number has two separate credit histories, one with SIN and one without SIN. This is due to the credit reporting structure in Canada. This can lead to two completely separate parallel histories, and often leads to inconsistencies (although typically the person in question will never notice the inconsistencies), because when a lender asks for someone's credit report with SIN, what the lender gets is different from what he would have gotten if he asked the report without providing the SIN. This is because, contrary to popular belief, when someone gets a new SIN for whatever reason, the two credit files are never merged unless the person requests specifically. As a result, a record with SIN zeroed out is kept separately from a record with SIN. Note this happens without the person even knowing it.^{[citation needed]}

See also

• Alternative data
• Comparison of free credit report websites
• Credit bureau
• Credit card
• Credit rating agency
• Credit reference agency
• Credit score
• Identity theft
• Fair Credit Reporting Act
• Fair and Accurate Credit Transactions Act
• Fair Debt Collection Practices Act
• Office of Fair Trading
• Remortgage
• Seasoned trade lines

References

1. ^ http://www.washingtontimes.com/news/2009/jan/19/credit-agencies-are-the-messengers/
2. ^ Credit Report Accuracy and Access to Credit. Federal Reserve Bulletin. Summer 2004
3. ^ Allstate Insurance Company’s Additional Written Testimony: Allstate’s Use of Insurance Scoring. 23 Jul 2002.
4. ^ ^{a b} Prepared Statement of the Federal Trade Commission on Credit Reports: Consumers' Ability to Dispute and Change Inaccurate Information: Hearing Before the Committee on Financial Services. 19 Jun 2007.
5. ^ Report to Congress on the Fair Credit Reporting Act Dispute Process. Federal Trade Commission. Board of Governors of the Federal Reserve System. Aug 2006.
6. ^ Turner, Michael A et al., Give Credit Where Credit Is Due, Political and Economic Research Council, 1.
7. ^ http://www.federalreserve.gov/boarddocs/RptCongress/creditscore/creditscore.pdf
8. ^ "Facts & Fallacies". Fair Isaac Corporation. http://www.myfico.com/CreditEducation/FactsFallacies.aspx. Retrieved 2007-08-08. 
9. ^ "What’s In Your Score". Fair Isaac Corporation. http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx. Retrieved 2007-08-08. 

Retrieved from "http://en.wikipedia.org/wiki/Credit_history"

Categories: Personal finance | Credit

Hidden categories: All articles with unsourced statements | Articles with unsourced statements from March 2007 | Articles with unsourced statements from December 2008

Personal tools

• Log in / create account

Namespaces

• Article
• Discussion

Variants

Views

• Read
• Edit
• View history

Actions

Search

Navigation

• Main page
• Contents
• Featured content
• Current events
• Random article
• Donate to Wikipedia

Interaction

• Help
• About Wikipedia
• Community portal
• Recent changes
• Contact Wikipedia

Toolbox

• What links here
• Related changes
• Upload file
• Special pages
• Permanent link
• Cite this page

Print/export

• Create a book
• Download as PDF
• Printable version

Languages

• 한국어
• 日本語
• ‪Norsk (bokmål)‬
• Русский
• Svenska
• Українська

• This page was last modified on 3 June 2011 at 12:13.
• Text is available under the Creative Commons Attribution-ShareAlike License; additional terms may apply. See Terms of Use for details.
  Wikipedia® is a registered trademark of the Wikimedia Foundation, Inc., a non-profit organization.
• Contact us

• Privacy policy
• About Wikipedia
• Disclaimers

• 
•