Credit
How to Boost Your Credit Score?
Credit Score Breakdown
Your credit score is extremely important to manage your finances. FICO means Fair Isaac Corporation. FICO scores also referred to as credit scores. Most lenders use your FICO score when determining whether they will extend an offer of credit to you. FICO scores range from 350 to 850. The higher your FCIO credit score, the better your credit rating. See the list below the breakdown of FICO credit score:
- Excellent Credit: Credit score between 750 and 850is considered an excellent credit rating.
- GoodCredit: Credit score between 660 and 749 is considered a good credit rating.
- FairCredit: Credit score between 620 and 659 is considered a fair credit rating.
- PoorCredit: Credit score between 350 and 619 is considered a poor credit rating.
However, it is possible that you can have a credit score of 0, which means that there is not enough information in your credit file to generate a credit score.
Role of your Credit History
If you have little or no credit history, getting financing approval can be difficult. Because your FICO credit score is based primarily on how you have used credit in the past. Having no credit history leaves you with no credit score. Without a credit score, lenders do not have an easy formula to determine if you are a credit risk. Many lenders do not want to take a chance on an unproven applicant.
Other Possible Factors for a Credit Score Review
A lack of credit history and no credit score does not mean you will automatically be denied financing. In addition to the four main factors of a credit report – identification, account history, public records of bankruptcies, liens, etc., and inquiries from other lenders – many lenders will also look at your residency, employment, and banking history.
Residence History:
Your residence history can play an important role in the lender decision-making process. Lenders may view not staying in one location for any extended period of time or breaking a lease at an apartment as negative factors. Conversely, a solid residence history may be seen as a positive element for a potential lender.
Employment History:
Your employment history is another factor many lenders review, especially if you have little or no credit history. Stable and consistent employment may be seen by lenders as a good indicator of a candidate’s level of responsibility.
Banking History:
When you have no credit score, your banking history may come into play. Lenders tend to look more favorably on applicants who have checking and savings accounts.
Building Your Credit History Can Help:
When you are approved for financing, you will begin to build your credit history. This will increase the chances that you will break free from the “no credit score” category. However, as you begin to establish your credit, you will not immediately achieve a perfect score of 850. According to a Bankrate.com article, credit applicants are evaluated as compared to their peers. This means that if you have a shorter credit history, you will be compared to others in a related scoring model. It is important to note that not all scoring models allow for a perfect score. However, this does not mean you cannot achieve a score in the excellent category range.
Having No Credit Score Isn’t a Hopeless Situation
Obtaining credit when you have no credit score can be frustrating since some lenders do not want to extend financing offers to applicants with no credit history. However, as noted above, some lenders will consider additional factors to applicants with limited credit histories. This means no credit score does not necessarily mean no credit offers.
How to Boost Your Credit Score?
Your credit score is an all-powerful number; capable of determining whether you get that new loan, car, or apartment. Banks use your credit score to determine your credit risk. The higher the score, the lower the risk, which can give you, better interest rates on loans. Even job applicants can have their credit scores pulled by employers, as a means of determining if they’ll be a risky hire for the company.
To land yourself in that credit-friendly range, consider these surprising ways to boost your credit score:
Check your Credit Report for Errors:
Payment history accounts for 35 percent of your credit score. Errors make their way onto your credit report when someone else shares the same name as you and the credit-reporting companies mix up your activity. More likely, identity theft has taken place, in which case your credit report’s payment history will be chock-full of errors.
So, you’ll want to check to make sure you’re actually the one responsible for all of the things appearing on your credit report. If you’re not, contact the credit-reporting agency to correct the errors. At annualcreditreport.com, you can get a free copy of your credit report from each of the three credit bureaus: Equifax, Experian, and TransUnion. Credit Experts suggest spacing out your free copies so you receive one every four months and can check for identity theft or clerical errors throughout the year.
Don’t take out too Many Credit Cards:
To keep your credit score high, limit the number of credit cards you apply for within a short period of time. Every time you apply for new credit, that application shows up on your credit report, so you’ll shoot yourself in the foot if you apply for a number of credit cards hoping to get one. The more cards you apply for, the more likely you are to be seen as a “credit seeker,” a less-than-desirable label for someone who wants to maintain good credit. “You don’t want to apply for credit that you don’t need.
The Less Debt, the Better:
A lot of credit card users think they have to carry debt on their credit cards to have a good score, which is not true. There’s this idea that there’s a hard-and-fast line of how much credit you should be using. The reality is, the less credit you use, the better. Ideally, you want to use less than 10 percent of your credit limit. If you use a lot of credit each month and are paying your bill in full, you may still be hurting your credit score. The balance that is reported to the credit bureaus is from whatever day the bank chooses, so it might be on a day that you’re close to your credit limit. That’s why making more than one payment each month will benefit your credit score.
Don’t wait to pay off your Bill all at Once:
You don’t have to wait until the first of the month or whenever your credit card is due, to make payments. You can make little payments throughout the month—micropayments—which will help lower your debt quicker. Such small payments help your credit score because they lower your debt utilization ratio, which accounts for 30 percent of your credit score. That ratio is how much debt you’ve accumulated on your credit cards divided by the credit limit on the sum of your credit cards. You want to keep that at around a third, or 33 percent.
Credit Score Not Available?
FICO scores are based on the last 24-months of activity if all of your accounts have been removed due to time or inaccurate information and you have no open accounts that you have made any payments on, it makes sense that your score would be a 0.
If you’ve had credit issues in the past to where they reported to the credit bureaus, then you’ll have a credit score. A credit report and credit score are two separate products. Your credit score will never be included with your free credit report. If you want to see your FICO credit score, you’ll have to buy it. It’s never free. You can buy it for a one-time fee of $19.95 at: http://www.myfico.com – There is no need to sign up for monthly credit monitoring. Just buy the one-time only score so that your credit card won’t get charged every month.
There is free credit score estimation services at http://www.creditkarma.com and https://www.quizzle.com/ – These are only estimations and NOT the real FICO score.
NO, a credit score is a picture of how you use credit.
A credit score is based on a 12-month activity proving you are paying in time. If you have not used any credit card in the last 24 months, they would explain why this is no info. You should have one major credit card and use it for gas and small items. After 24 months, it should be between 660 -749 which is a good score.
Credit Score -The Golden Rules:
Pay your bills on time. Keep balance low on credit cards and other revolving credits. Open new credit accounts as needed. Pay off debts rather than moving it around. Protect your credit information from fraud and identity theft. Reduce your debt to credit ratio. Dispute things on the credit report that are wrong. Get out of debt. Build up different types of credit. Paying off loans increase your score.
Wrap Up:
FICO scores range from 350 to 850. The higher the score, the lower the risk, which can give you, better interest rates on loans. At annualcreditreport.com, you can get a free copy of your credit report from each of the three credit bureaus: Equifax, Experian, and Trans Union. A credit report and credit score are two separate products. Your credit score will never be included with your free credit report.
Contact Us for your credit issues. Call REALTOR Faruk Now @ 562-213-8892 For Assistance