If you are in the process of repairing your credit report then you know how important your credit score is. This three digit number can determine your lifestyle more than by how much money you earn.
With a bad credit score you may be having employers turn you away from a job. You may be unable to purchase a home or get approval for an auto loan or a credit card. On occasions when you are approved it is at sickening interest rates.
If you learn how the credit system works than you can use that knowledge to better your credit score. With a higher credit score you will be able to make the purchases you want or have extra money because you are not spending it on high interest rates.
When credit bureaus compute your credit score they use an algorithm or equation. They input your credit history and a computer calculates your credit score.
Your credit score is a measuring stick that lenders and employers will judge you upon. When you apply for credit most lenders will look at nothing more than this three digit number.
How can you use the credit system to your benefit? You need to know there are two pieces of information that are most important to the systems equation.
1. Remove negative accounts. Negative accounts on your credit report will do the most damage to your score and need to be removed.
2. Keep an unsecured revolving line of credit. This can be done by almost anyone.
The actual credit bureaus algorithms are protected and not released to the public. However upon review of thousands of credit files it has been found that having an open account is almost as important as removing negative credit items.
An unsecured credit line will increase your credit score because:
1. You are creating positive payment history with every month you pay your bill on time. Also credit bureaus like to see that this account has aged. Meaning it has been an open account for a while.
2. Increase your ratio of debt to credit. This is how much credit you have in relation to how much debt you have. You want to be able to show the credit bureaus that you are not using all your available credit.
The credit line will help your score the most if it is unsecured. However depending upon where your credit score is you may need to get a secured credit card which guarantees approval for everyone.
The credit line will help tremendously but it is most important to delete negative credit from your report. If you can not get approved for an unsecured credit line try to remove the negative marks from your credit report and then reapply.
It is possible for everyone to achieve a 700 credit score for themselves. So start today and erase the derogatory marks and build positive marks on your credit report.
About the Author:
To learn more about how to remove derogatory listings such as charge offs or for to learn how to proceed with an equifax dispute visit us.
No comments:
Post a Comment