Five Important Factors Concerning Credit Scores You Need To Know.

There is a clear and distinct relationship between credit rating and credit repair. If your credit rating is somewhere around 600 or below, rebuilding your credit is a needed task at hand so you can remain in good standing with your creditors

Some might ask, what is a credit rating? Credit score or rating is simply an indicator that tells creditors if you are credit worthy. In other words, you can and will be paying your debts. A simple way of doing this is to record certain things about your spending habits and borrowing habits in a computer database system and within seconds, lenders can see the results appear on their screen.

Credit scores can range from 350 to 850 (the lowest to the highest) and as mentioned earlier, a score of 600 or below is not good, because if you apply for a loan, you will be paying higher interest rates compared to someone who has a better rating of 700 or above and this is usually based on 5 factors.

Factor number one that absolutely affects your score are, the number of inquiries you or a lender has made in the last couple of years directly connected to your name or social security number. If you have applied for credit somewhere and the payments are timely then your score will remain in good standing on the report. If you have applied for credit over and over again in those two years this will actually hurt your score. Every time an inquiry is done on your credit history, this affects your score. The more inquiries in a shorter period of time, the more points are shaved off your score.

Factor number two, what is the nature of the credit you actually have? Revolving accounts, student loans, vehicle, in store credit, bank loans, etc. These different accounts have various risks and the life of each account is not necessarily all the same. That is why they are gauged differently. There are still systems that barter credit as goods for goods. Not just money trading hands.

Factor number three, what is the length of your credit? People who have a line of credit for 5 years or more and have made timely repayment along the way in that period have a better credit rating compared to someone who just graduated from college. Most of the time younger people will need a cosigner for a small loan or the lender may allow them a small credit card with say a $300 cap until they can show they are able to go beyond that limit with responsibility.

Factor number four, how much is your debt? Debt is not a bad thing as long as you are able to pay for it. If you have borrowed money in the past and maintained the ability to repay then this will increase your rating and be a credit to you as a borrower. Debt to income ratio is the formula that is used quite regularly to find out if the borrower can handle the debt being acquired.

Factor number five, what is your payment history? This is somehow connected with your length of credit because this will show if you have been able to make payments on time over the life of your debts. Naturally if you have missed payment deadlines or possibly even defaulted on a loan this hurts your score and tells future lenders what type of borrower you have been.

All these factors are equally important. The best way to stay in touch with your credit standing is to acquire frequent credit reports say once a quarter through a membership or something similar that will allow you access to monitor your credit rating and what is going on with your credit history or status. There are things that pop up from time to time that might not be your debt. People do make mistakes but it is really up to you as the borrower to keep up with these things concerning your personal activity.

If you are denied credit for some reason, then you can usually get a free copy of your credit report through this activity. Take advantage of that.
Keep up with your own credit worthiness bearing in mind the previous five factors.

On thing to bear in mind when reviewing a credit report is that the credit reporting companies like Equifax may not use the same structure as say Trans-Union. That is why when doing an overall evaluation, It is important to get a report from each of the three companies.

However, should something there be outdated or mistaken, it is up to you to get it corrected. If you have documentation to prove the falsity or if the time period has passed for it to come of your report, write a letter and send this to the credit agency stating the claim you have of getting said remarks removed from your report.

If what the report says is true and you are in a lot of trouble, then steps have to be taken to initiate credit repair. You can do this by yourself or with the help of a counselor.

Regardless of who is involved, only one thing is certain and that paying off whatever outstanding debt you have is the only way to improve your score.

Taking matters into your own hands and initiating some type of repair or rebuilding process is the only way to make a difference in keeping good standing concerning your name and social security number connected to you.

Thanks for now and Take Care!