Credit Rating Explained

Any type of loan approval for credit cards, car loans, mortgages, student loans will depend on your credit rating or credit score. An average credit rating will make it somewhat more difficult to get approved for a consumer loan. Most lending institutions use some sort of credit rating system. All 3 major credit agencies have different names for their scoring models. If you knew more about their credit rating models you should be able to increase your credit score.

Here are some factors involved:

Credit scores are usually ranked between 350 to 850 the lower the score the greater the risk for the lender and possibly no loan.

Higher score = better terms, interest rate.

The national average is about 650 to 675, but the goal of every consumer should be to achieve a credit score of 800.

Here is a list to begin the journey to an 800 credit rating...

1. Limit the number of credit cards you sign up for, more cards mean more debt     and more inquiries. (See article on inquiries here)
Usually 1 card is enough, but no more than 3.

 Tip: Don't carry all your cards with you all the time a good way to limit purchases when shopping

2. Make payments on time, late payments will adversely affect your score.

 Tip: If you know you will be late call the creditor and explain why, they may waive the late fee. If you know you cannot pay after the due date you will get a late fee so just pay it NEVER GO OVER 30 DAYS LATE!

3. When you apply for credit card or loan, do your homework and don't apply for too much credit too often. This could mean a lower score as it shows you cannot live without credit.

 Tip: Research loan APR's, rates, terms, repayment schedules, fees & penalties before you apply for any credit.

4. Outstanding balances are considered in the scoring models by lending institutions. If you exceed the limits you will be considered a bad risk and cause your scores to plummet.

 Tip: Maintain a balance of 30 to 35% of your total credit limit on each account. Don't use all your credit spending power at one time.

This should give you a good headstart to achieving your goals.

Click here to see my other articles on debt, credit repair, and my recommendations
 When you achieve you goal "KEEP ON TOP OF IT" !

If You Need Help Try "Lexington Law Firm" My Personal
Recommendation.

Good Luck !!
Mike

P.S.  In closing, join the mikescreditstory monthly newsletter  Join Here
        Informative articles, follow my own credit repair journey, and a Free Gift