Credit Score – CardBenefit https://www.cardbenefit.com Compare and Apply for Best Credit Cards at CardBenefit Mon, 29 Jan 2024 04:09:59 +0000 en-US hourly 1 7 Ways to Improve My Credit Score https://www.cardbenefit.com/how-do-i-improve-my-credit-score/ https://www.cardbenefit.com/how-do-i-improve-my-credit-score/#respond Fri, 10 Jul 2015 22:21:10 +0000 http://www.cardbenefit.com/?p=13810 Having a good credit score is important to your financial health; the tips listed will help you on your way to improving and maintaining your credit score.

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credit score Life’s most important decisions run on credit; your credit score, or FICO® Score is the key to mortgaging a house, buying a car, getting lower interest rates on loans, and much more. Because this three-digit number is such a crucial factor in major life decisions, it is important for you to constantly improve and maintain your credit score. The following 7 tips will ensure you on the right way to improving your score.

1. Check your credit report.

As long as you order your report directly from a credit reporting agency, requesting your own credit report will not hurt your score. To begin improving your credit score, request a free copy of your credit report and check for errors. You are entitled to one of each of your three credit bureau reports (Experian, Equifax, and TransUnion) for free every 12 months through AnnualCreditReport.com. Stagger them and request one every four months. Make sure there are no late payments incorrectly listed for any accounts, and that the amounts owed for each open account are correct. If you find errors, dispute them with the credit bureau.

2. Pay your bills on time.

Payment history is 35% of your FICO® Score! Delinquent payments and collections will hurt your score, and stay on your credit report for seven years. However, the longer you pay your bills on time, the more your credit score should increase. Older credit problems count for less, so the impact of a late payment will decrease over time. Avoid having balances on every card, because your score considers just how many of your cards have balances. So, charging $20 on two cards instead of $40 on one can possibly hurt your score.

  • If you are paying on time every month but maxing out your limit, the bank thinks you are a spendthrift! If you cannot decrease your spending, then consider increasing your credit limit. Be careful not to also increase your spending habits.
  • Another option is to pay your bills twice a month, once just before the statement closing date and second right before the due date. The first will likely reduce the balance that the credit bureaus see and the second helps to avoid interest or late fees.

3. Keep low credit card balances.

High outstanding debt can hurt your score. One of the major factors in your credit score is how much revolving credit you have versus how much you are using. The smaller the percentage, the better for your credit rating; optimum is 30% or lower.

4. Reduce the amount of debt you owe.

For some, reducing your debt might be more important than improving your score. The optimal payment plan is different for each person, but you should put most of your available budget towards the highest interest cards first, while maintaining the minimum payments on other accounts. You can also consider transferring your debt to a credit card with a lower interest rate, but keep in mind that balance transfer fees are inevitable and transfer rates expire.

5. Consider applying and opening new credit accounts.

Reestablishing your credit history by opening new accounts (i.e. credit cards and installment loans) responsibly and paying them off on time will raise your credit score in the long term. However, do not open them solely for a better  credit score. Also, if you have a short credit history, do not open a lot of new accounts too rapidly. The new accounts will lower your average account age and decrease your score. Rapid account buildup also looks risky if you are a new credit user.

  • If you are not sure you are able to use credit wisely, consider a secured credit card, and make sure to choose one that reports to all three major credit bureaus.
  • You might also consider asking someone – a friend, or family member – to make you an authorized user of a credit card they’ve had for a long time and handled responsibly.

6. Do not close existing credit accounts.

Closing accounts not only lowers the number of open revolving accounts, but also decreases the total amount of available credit, resulting in a higher utilization rate, or balance-to-limit ratio, and a lower credit score.

7. Contact a credit counselor.

If you are struggling to improve your score, contact your creditor to meet with a credit counselor. They may or may not be able to help your score immediately, but seeking assistance from a counseling service cannot hurt your score.

8. Be patient.

The final key to having a good credit score is patience. Credit is important to your financial health, and creditors want to see that you have the ability to maintain a good, responsible standing in the long-run. Having knowledge of how your credit score is calculated, along with the tips listed above, will help you on your way to improving and maintaining your credit score.

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What is a Good Credit Score? https://www.cardbenefit.com/what-is-a-good-credit-score/ https://www.cardbenefit.com/what-is-a-good-credit-score/#respond Wed, 01 Jul 2015 18:47:44 +0000 http://www.cardbenefit.com/?p=13750 When it's time to make big life decisions such as buying a car or putting a downpayment on a house, having a good credit score is going to be a crucial factor. Learn about credit scores today.

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good credit score ratingA person’s credit score on the FICO® scale ranges between 300 to 850. A score of about 690 or higher indicates a very good credit history. Those with scores below 630 will often find financing at a favorable rate significantly more difficult. According to FICO®, the median credit score is 723 in the U.S. (2014). Borrowers with this average are only delinquent 5% of the time. Anything in the mid 700’s and higher is considered excellent, and results in easy credit approvals and the lowest interest rates.

Here is the general breakdown of the FICO® Score ranges:

  • Excellent Credit: 781 – 850
  • Good Credit: 661-780
  • Fair Credit: 601-660
  • Poor Credit: 501-600
  • Bad Credit: below 500

These ranges are not set in stone, because lenders have their own definitions of what is a good credit score. Lenders looking to approve more borrowers might consider a wider score range than lenders who are more selective.

There are other credit scoring methods available to lenders:

  • FICO® Score range: 300-850
  • VantageScore 3.0 range: 300–850
  • VantageScore range (versions 1.0 and 2.0): 501–990
  • PLUS Score range: 330-830
  • TransRisk Score range: 100-900
  • Equifax Credit Score range: 280–850

With every method, the higher the score, the lower the predicted risk. These scores take into account factors like payment history, debt levels, and age of credit accounts to predict how customers will handle credit and loan payments. It is important to know what method your score is based off, because a FICO® score of 840 may be an excellent score 10 points shy of the highest score possible, but a VantageScore 2.0 score of 840 is 150 points away from the highest score possible.

The Benefits of a Good Credit Score

A good credit score allows you to borrow money or open a credit card with a comparatively lower interest rate. So, strengthening your credit score helps to save money over time. Consumers should check their credit score before applying for credit, so they can identify areas for improvement, and build their score to increase their chances of approval. Improving your score before applying for new credit accounts can save you hundreds, or even thousands, of dollars in interest on a mortgage or a loan. Furthermore, lenders and employers use good credit as an indicator that someone is responsible, trustworthy, less likely to commit insurance fraud, etc. Therefore, aside from saving money through lower interest rates, building your credit score will also help you land that amazing job and purchase your dream home.

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Tricks to Boost Your Credit Score https://www.cardbenefit.com/tricks-to-boost-your-credit-score/ https://www.cardbenefit.com/tricks-to-boost-your-credit-score/#respond Wed, 01 Jul 2015 13:27:46 +0000 http://www.cardbenefit.com/?p=9236 It takes patience and persistence to bulid good credit score. If you pay your bills on time and keep your card balances low over the long haul, you will be rewarded with a solid score. But what about quick fixes? There are a few sneaky ways to legitimately to boost your credit score. Read more for details.

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credit scores It takes patience and persistence to bulid good credit score. If you pay your bills on time and keep your card balances low over the long haul, you’ll be rewarded with a solid score.

But what about quick fixes? Many of these tricks are scams. But there are a few sneaky ways to legitimately to boost your credit score. Here are a few ways to do it:

1. Ask credit card companies to increase your credit limits

Credit utilization, or how much of your available credit you’re using, affects 30% of your credit score. Many credit experts insist you keep your balances low if you want to increase your credit score. Asking your credit card issuers to increase your credit limits will benefit your credit score in the same way. The increase in available credit will automatically lower your credit utilization ratio. It is preferred that you keep your balance to less than 25% of your available credit.

2. Keep and use old cards occasionally

The length of time that you’ve had credit affects 15% of your credit score. The longer your credit history, the higher your score can be. Therefore, if you ever want to close some of your credit cards, you should choose to keep the credit cards with longer histories and close those newer ones. But credit cards that haven’t been used for over six months may not help improve your credit score. Those credit cards may be reported as inactive ones by credit card issuers, as a result, they are not factored into all FICO credit score formulas. Therefore, it is better to use your old credit cards occasionally to keep them active so that they contribute to your credit score.

3. Piggyback

If your credit history isn’t all that long or spotless, adding a credit card account with a long, positive credit history to your report will certainly boost your score. But how do you all of a sudden add an old account to your report? You may ask someone — a friend, relative or someone you trust and who trusts you — to make you an authorized user of a credit card they’ve had for a long time and handled responsibly. By doing so, the whole entire history of the credit card from day one will show up on your credit report. In addition, the original card holder can choose not to give you the access to the credit card so that he/she can be sure that you can’t use the credit card to rack up debt.

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Credit Inquiry and its Impact on Credit Score https://www.cardbenefit.com/credit-inquiry-and-its-impact-on-credit-score/ https://www.cardbenefit.com/credit-inquiry-and-its-impact-on-credit-score/#respond Wed, 01 Jul 2015 00:10:54 +0000 http://www.cardbenefit.com/?p=13695 A credit inquiry is a notation whereby a bank or credit-issuing institution requests an individual’s credit report to evaluate their “creditworthiness”, or likelihood to repay money that is lent to them. There are two types of inquiries: hard inquiries and soft inquiries. Only hard inquiries can negatively affect your ...

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credit inquiry A credit inquiry is a notation whereby a bank or credit-issuing institution requests an individual’s credit report to evaluate their “creditworthiness”, or likelihood to repay money that is lent to them. There are two types of inquiries: hard inquiries and soft inquiries. Only hard inquiries can negatively affect your credit score, but with responsible actions, your score can easily be recovered.

Hard Inquiry vs. Soft Inquiry

A soft inquiry generally occurs when someone checks your credit report as part of a background check, such as in employer background checks, pre-approved credit card offers, and inquiries where you are checking your own credit. Although soft inquiries can be recorded in your credit report, they will not affect your credit score.

A hard inquiry occurs when a financial institution, such as a lender or credit card issuer, checks your credit report to make a lending decision. This occurs when you apply for an auto loan, credit card, or mortgage. Applications not tied to credit can result in hard inquiry as well, such as a credit check for a new phone or apartment.

How much will a hard inquiry impact my credit score?

In general, credit inquiries have a small impact on one’s credit scores. For most, one additional credit inquiry will take at most five points off their FICO Scores. However, they can have greater impact if one has a short credit history or few accounts, or if one has six or more inquiries on their credit report.

Sometimes, multiple inquiries are generated when rate-shopping for a mortgage or a loan, as well as when searching for a rental property such as an apartment, but the FICO®  Scoring consolidates the inquiries of a short shopping-period (14 days or 45 days depending on the model) into one credit inquiry. As long as you are diligent about paying off your monthly balances and using your credit responsibly, your credit score will rebound fairly quickly.

How can I raise my credit score?

  • Re-establish your credit history. Open new accounts responsibly and pay them on time. The hard inquiry on the new account may drop your score for a few months, but the benefits from opening a new credit account could outweigh the initial drop in your score.
  • Check your own credit reports regularly to make sure they are accurate and updated, before applying for new credit. If you order your credit reports through organizations authorized to provide credit reports to consumers, your own inquiries will not affect your credit scores.

 

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What is a Credit Score? https://www.cardbenefit.com/what-is-a-credit-score/ https://www.cardbenefit.com/what-is-a-credit-score/#respond Tue, 30 Jun 2015 23:01:51 +0000 http://www.cardbenefit.com/?p=13681 A credit score is a mathematical model used by a majority of banks to evaluate a person’s financial reliability or credit risk. The score gives lenders a “lend/reject” answer for people applying for credit or loans. A credit score is also commonly referred to as a FICO Score (Fair ...

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fico credit score A credit score is a mathematical model used by a majority of banks to evaluate a person’s financial reliability or credit risk. The score gives lenders a “lend/reject” answer for people applying for credit or loans. A credit score is also commonly referred to as a FICO Score (Fair Isaac and Company), after the company that came up with the scoring method and software now used by banks, lenders, insurers, and other businesses today. Fair Isaac worked with each of the three major credit bureaus (Experian, Equifax, and TransUnion), to create a scoring method that takes into account the following factors:

Payment History (35%)

This component inspects how well you meet your prior obligations on different account types. It also examines past problems such as bankruptcy, collections, and delinquency. It considers the severity of the problems, the time it took to resolve them, and how long it has been since the problems occurred. The more problems there are in your credit history, the weaker your credit score.

Amounts Owed (30%)

This category is the amount you currently owe to lenders, an indicator of your present financial situation. The focus is mainly on your current amount of debt, but it also considers the number of accounts and specific types of accounts that you hold.

Length of Credit History (15%)

This includes both the time since your accounts have been open, as well as the time it has been active. This category is pretty straightforward; the longer your history of making timely payments, the higher the score.

Types of Credit Used (10%)

Having various accounts, such as installment loans, mortgage, retail accounts, and credit cards may improve your score.

New Credit (10%)

Your score considers how many new accounts you have applied for recently and when you last opened a new account. It assumes people who apply for credit a lot have financial pressures, so each new credit lowers your score a little.

A person’s credit score ranges between 300 to 850. A score of about 690 or higher indicates a very good credit history, which definitely helps the person get approved for loans with better interest rates or credit cards with attractive perks. Those with scores below 630 will often find financing at a favorable rate significantly more difficult. A credit score evaluates both positive and negative information in your credit report; for example, late payments will lower your score, but establishing a good track record of making on-time payments will raise your score. Although a credit score is only calculated from the information in your credit report, when lenders are making a credit decision they may also look at other information, such as your income, how long you have worked at your current job, and what kind of credit you are requesting.

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Your Credit Rights to Access Free Credit Reports https://www.cardbenefit.com/your-credit-rights-to-access-free-credit-reports/ https://www.cardbenefit.com/your-credit-rights-to-access-free-credit-reports/#respond Mon, 24 Mar 2014 13:31:18 +0000 http://www.cardbenefit.com/?p=9248 Do you know the Fair Credit Reporting Act (FCRA)  requires each of the nationwide consumer reporting companies — Equifax, Experian and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. The Federal Trade Commission (FTC), the nation’s consumer protection agency, ...

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free credit reportDo you know the Fair Credit Reporting Act (FCRA)  requires each of the nationwide consumer reporting companies — Equifax, Experian and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. The Federal Trade Commission (FTC), the nation’s consumer protection agency, has prepared a brochure, Your Access to Free Credit Reports, explaining your rights under the FCRA and how to order a free annual credit report.

A credit report includes information on where you live, how you pay your bills, and whether you’ve been sued, arrested, or filed for bankruptcy. Nationwide consumer reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home.

How do I order my free report?

You can order your free annual credit report online at annualcreditreport.com, by calling 1-877-322-8228, or by completing the Annual Credit Report Request Form and mailing it to:

Annual Credit Report Request Service,
P.O. Box 105281, Atlanta, GA 30348-5281

When you order, you need to provide your name, address, Social Security number, and date of birth. To verify your identity, you may need to provide some information that only you would know, like the amount of your monthly mortgage payment.

A Warning About “Imposter” Sites and Trial Offers

If you want to order free annual credit reports online, make sure you spell annualcreditreport.com correctly to avoid being misdirected to other websites that offer supposedly free reports, but only with the purchase of other products. While you may be offered additional products or services while on the authorized website, you are not required to make a purchase to receive your free annual credit reports.

Chances are you’ve gotten offers to receive your credit reports through a “free trial”. A company may claim its free trial offer has no risk or obligation. And that may be true, but only if you take timely action to avoid future obligations. Read the whole offer carefully before you decide whether it’s a good deal for you. Never give in to pressure to agree to a deal. If you have a problem with a trial offer, try to resolve it with the seller first. If you’re dissatisfied with the response, contact your local Better Business Bureau or local consumer protection agency.

The FTC recently settled a lawsuit against ConsumerInfo over the “free credit report” promotion it marketed through advertising on television, radio an the Internet, including its websites of freecreditreport.com and consumerinfo.com. The settlement, among other things, provides for refunds to certain Consumerinfo customers.

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