A credit score is a number that’s calculated based on a person’s history of repaying their debt and helps lenders decide whether a potential borrower is a risk or not. It’s used by almost all banking companies and charge card organizations to analyze if there is any danger in lending products or services to a potential borrower.
Continue reading “How are Credit Scores Calculated?”
Today, everyone seems to be concerned about his or her credit score. Lenders and credit bureaus have made it apparent that the FICO score, whether the new VantageScore model or the FICO score model, is a essential part of determining whether or not to offer credit to a consumer. The score is a distillation of quite a few factors that make up a consumer’s credit rating and it allows a loan provider to see, instantly, if the would-be borrower is worth the loan.
Not only will a high FICO score make it more very likely that a consumer will get a loan, but the score will also help decide whether that loan will be granted at a good rate of interest. The ideal interest rates are given to those with the ideal scores, and those with lower scores will need to pay higher interest rates and expenses. For this reason, many consumers are excited about knowing how to improve their scores, and there is not a shortage of institutions that are willing to provide advice on that topic for a fee.
But the one thing that every consumer can do to increase their credit score is simple to do and costs nothing – pay bills in a timely manner. It may seem both easy and apparent, but a history of paying bills promptly is very important to creditors. After all, the decision regarding whether or not to grant a loan is based in part upon whether or not the loan provider expects to be paid back. The more likely the consumer is to repay, the less likely he or she will be to default.
How a consumer has historically paid bills makes up 35% of the credit scorefFICO score. More than one third of the score is devoted to whether the bills were paid on time or paid at all. No other portion makes up as big a portion of the score, and for great reason – lenders desire to be repaid! That said, the easiest and most affordable way to start improving a FICO score is to create a concerted effort to pay bills on time. It is more favorable to remit even a minimum payment on time than it is to pay too late and in full. With Internet bill paying becoming more and more common, it’s possible to plan bills to be paid automatically, which can be of tremendous benefit to those consumers who aren’t too planned and occasionally just forget to pay.
This is one of those cases where the most highly effective solution also happens to be the cheapest, and this solution is free. If you wish to see your FICO score increase, make sure that your bills are paid promptly.
Credit report disputing is the main process you use for basic credit repair. You have to write the dispute letter correctly of course, but perhaps just as important is how you send the dispute letter to the credit bureaus. If you don’t send them right, then your shot at succeeding with the dispute letter is greatly decreased. You can find hundreds of credit letter examples all over the internet. Lots of sites will give them to you for nothing. There is just one place we have heard of that will let you use free software to produce the dispute letters. That website is CreditBlossom.com.
We are not going to address the dispute letter format in this article since you can find several styles all over the web. In this article you are going to find out how to send out the dispute letters to perform basic creditrepair. Please note, this is almost as important as the dispute letter itself because if you send the letter improperly, it will likely fail to produce any results.
Once you have created the letter, you have to make an ID page to mail with the letter. The ID page contains identification that will confirm to the credit bureaus that it is really you sending out the letters. You might wonder why you have to do this. If you are sending out the letter, shouldn’t that be enough? Of course, that is the logical thought, but you have to put yourself in the position of the credit bureaus. They are handling millions of pieces of mail. They cannot be bothered with mail that is not definitely coming from the person disputing the item on the credit report. Even if you had a credit repair clinic make and send these letters for you, they are going to require that you provide them with the ID documents to send with the letters. The ID page confirms to the credit bureaus that it is definitely you sending the letters.
The ID documents that you must include are the following:
1. Copy of your driver’s license.
2. Photocopy of your social security card.
3. Photocopy of a household bill.
After you have gathered all these needed documents, you will copy them all on to 1 or 2 pages. The copy must be very clear. If you cannot read the words on the copies, then the credit bureau employee will not put any time into trying to make out the words and they will either discard your letters, or they will mail you a letter requesting you to send your ID to them again and that will slow down the credit repair process.
After you have made a clear copy of your ID, you will need to make enough copies of that copy to include with all the letters you plan to mail to the credit reporting agencies. If you visit creditblossom.com you can view a sample of what an ID page is supposed to look like. If you cannot squeeze everything on to one page (because maybe you had to change your address for your driver’s license and you need to include the sheet that verifies the update) you can certainly prepare the ID page on two pages. That is not ideal, but it will not mess up the process