Personal Loans and Credit Score

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Working with a credit counselor
Worried about debt collectors? Can't seem to develop a workable budget? Unable to save for retirement? If these sound familiar, you may want to consider a credit counseling agency.

Here's How:
Look under "credit counseling" in your telephone directory or your Internet search engine to find a credit counselor near you.

If you have too much debt or are unable to repay y... Read credit counseling article



Dispute Credit Report Errors
Your credit report is a type of consumer report and contains information about where you work, live, what you own and how you pay your bills. It also may show whether you've been sued or arrested or have filed for bankruptcy. Companies called consumer reporting agencies (CRAs) or credit bureaus compile and sell your credit report to businesses. Because businesses use this information to evaluate y... Read credit counseling article



Personal Loans and Credit Score
Did you know that your credit score will most definitely impact the rate you pay on loans? That's right, the higher your credit score the lower your interest rate will be for a home mortgage, auto loan, credit card, and countless other personal loan deals. Conversely, the lower your credit score, the higher your interest rate will be if you are approved at all! Let's take a look at what is behind personal financing when your credit score comes into play, which is all of the time.

Risk - Lenders never look at you as a person, rather they look at you as a risk. One big question they ask themselves: how certain am I that you will repay your debt? When your credit score is good, then they "reward" you accordingly with a good rate. When your credit score is terrible, then your rate is raised to reflect the higher risk. Moreover, the lower your score the less of a chance you will be approved for a loan in the first place!

My Fico - The Fair Issac Corporation is an independent company that helps to determine your credit score. Your score is based on the following five factors: your payment history, amounts owed, length of credit history, new credit, and types of credit used. The first two categories make up about two thirds of your score so if you are behind on payments and you owe a lot of money, expect your credit score to sink accordingly.

Your Credit Reports - As part of an agreement reached between the federal government and the three credit reporting bureaus - Experian, TransUnion, and Equifax - you are entitled to one free copy of your three credit reports every year. Get copies of your credit report and examine them closely for errors. Make certain that the information contained therein is correct, if not contact the credit reporting company and have them make the necessary changes.

Obtaining Your Credit Scores - When obtaining your credit reports you should also find out each credit reporting agency's calculation of your credit score. You'll pay for that privilege, usually 5 to 8 dollars per score, but it will be helpful information to have on hand when you apply for your next personal loan.

Of course, if your score is low it could take six to twelve months of steady repayment of current debt to increase your score. Things don't change overnight for the good, but they can for the bad. So, stay on top of your credit to avoid future bad credit personal loans.

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Understanding Your Credit Report

More and more people are becoming aware of their credit report, and how it affects them in their daily lives. As they apply for a home loan, credit card, or line of credit, they realize that credit scores can make a huge difference in the amount of interest they will pay. Some have even realized to their chagrin that past indiscretions and problems can come back to haunt them. Being turned down for a loan can be very painful and embarrassing.

If you are ready for an intelligent look into your credit situation, then you may want to take a long look at your own credit report. When you have acquired a transcript of your credit report, it is plainly in your interest to understand how to interpret it. There are loads of numbers and distinct accounts on one piece of paper, and you should strive to understand what you are looking at, and what it all means.

Three major credit-reporting agencies

There are three pre-eminent credit reporting agencies that are going to play a big role in your credit life. The "Big Three" are Experian, TransUnion, and Equifax. You should copy a transcript of your credit report from these three companies, at the very least, every 12 months. You can find out additional information about these companies online and they will guide you how to acquire a no cost credit report.

The large credit scoring companies have fee-based websites, where you can look at your credit score whenever you'd like, see how your credit score has changed over time, and see any inquiries that have happened. You can even sign up for alerts that will let you know if anything has changed with your credit score. This can be a big advantage if you are trying to increase your credit score to get better interest rates.

What is in these reports?

All credit reports have similar information in them. They will have your identifying information, such as residence address, social security number, drivers licence number and other items. Each credit company will have payment history, late payment information and balance owed. There will be information from the public record if any exists. There will also be any inquiries from credit companies in the last months.

The three major credit agencies' reports will have distinct information in them. This is because each company has different credit companies that subscribe to them, and that is how they get their information. The credit card companies, mortgage companies, and banks all send credit information on each creditor on a monthly basis. The agencies then tabulate all the credit information they receive about you, and come up with a new credit score.

In addition to the Big Three, a company called Fair Issacs also keeps credit score information for it's customers. They also compute what is known as a FICO Score. Fair Issacs is considered the "Father of Credit Scoring," since they were the first to devise the credit score as a way to make lenders' jobs easier.

The major parts of a credit report

A credit report is separated into four sections, identifying information, credit history, public records, and inquiries.

Identifying information
Your identifying information is the section that identifies who you are. There are maybe hundreds of people in the United States having an identical name (can you imagine how many John Smith's there are?), but all people has a discrete social security number. The report should also confirm your driver's license number, last known address, and unique phone number.

Credit history
The second section of your credit report is your credit history. Each individual's account will have the name of the creditor and the creditor's account number. You will want to make certain that these are authentic accounts that you maintain now or had at one period. If they are incorrect, you will be shown a way to contest them.

Public records
This is the section that obtains any report about your past criminal record. This will also contain any arrests or bad judgments that have been made against you. This is a section that is better off empty for obvious reasons.

The inquiries
The last part to a credit report is the inquiries. This is anyone who has seen a transcript of your credit report. Anytime that you apply for a loan, credit card or line of credit, some one can see your report and they will pull an inquiry report. This is a very complete report. It is not a good practice to show a lot of inquiries on your credit report.

Changing your credit report

If there is any part of your report that is in question, you will have a way to dispute or correct it. The dispute will be reviewed and the questionable information may be taken off your credit report. If it cannot be taken off of the report, you should have a way to add your own explanation of the situation to the report. This could help a potential lender understand the situation more fully.

I hope that this article has given you a basic understanding of what is in your credit report, and what you should look for when reading your credit report. To find the credit agencies, do an online search for their websites.




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