Credit scores and their link to the lending industries

If you have ever applied for a line of credit, you know that your lender requests a copy of your credit report from all three of the credit bureaus using a company that provides that information. This company is located either locally or regionally. This company pulls your credit report with a one click button electronically,

Along with your information, the credit report company pulling your credit gets a numerical score. This score reflects your credit history, ability to save, employment and so forth. If you haven’t heard about it this is called your FICO scores, which was put in place by the Fair-Isaacs Company several years ago. What people don't know is that, with credit information poured onto their credit reports almost every day and their credit scores can change from day to day. That's why you can apply for a credit card with one company today and have a credit score of 720, then apply with another credit card company a couple of days later and guess what? Your score can be either lower or higher, depending on the information available at the credit bureaus’ information repository.

The truth no one really knows how your credit scores are assessed. Due to the erroneous levels of information being reported to peoples' credit reports, pressure was put on Congress to make the credit bureaus more accountable for any inaccuracies of the any information reported AND to disclose what goes into their scoring system.

Why is all of this important to me? The lending companies have moved toward a risk-free pricing plan. This means that the higher someone's credit scores, the less documentation they must provide a creditor to prove that they are of creditworthiness. Also, that means their interest rate and any other fees a borrower has to pay will be solely based on their credit scores of their FICO.

The system maybe unjust to some, but is a blessing for those of you who keep impeccable credit scores. It is one way that great credit can be rewarded. In past years, we have seen a dramatic drop in documentation requirements while risk-free rates and fees have become more and more common.

If you’ve recently pulled your credit report then realized that you were unhappy with what has been previously reported, you should take these very easy steps to correct the inaccuracies reported. In addition, there are some extra steps you can take to improve your credit scores, especially if you plan to apply for a credit card or a home loan sometime soon. While we plan to go into the correcting inaccuracies in your credit report in ((PART TWO)), we can offer you a few simple hints as to how to become a pro in improving your credit scores without leaving your home.

The first step is very obvious. Make your payments on time. secondly, stop applying for new credit cards or unnecessary lines of credit. Each time you sign and mail out a new credit card offer, or start an extra department store account to get an additional 20% off discount, a simple inquiry is sent to the bureaus which will result in a reduced credit score. Thirdly, you must maintain your line of credit balances. try keeping your balances at a level that is 30% - 40% of your maximum credit limit. In That basically means that if your credit limit is $2,000, try keeping your balance at $600 - $800. If you consolidate all of your credit cards onto just one, your credit will be hurt, especially if the balance to that account is at the top limit (Maxed Out). The fourth and last is, if you get into a dispute with the cable company and the amount in dispute isn't a large amount, pay it off and save your credit score. Having collections, even if they are small amounts, will negatively affect your credit scores.