The Best Way To Check Your Credit Score

There are so many offers for free credit scores. You see them everywhere: on TV, in magazines and just about every website you look at. Of course, each ad will try to convince you that they have the best way to check your credit score. But which one can you trust? Will it really be free? Is there a catch? These are the obvious questions. But the most important question is not so obvious. It's a question many people don't even think about asking. The question is: Which credit score are they offering?

Your credit score is based on the information in your credit report. Each item in your report is given a numerical value, and that value is either added to your score if it's a positive item, or subtracted if it's a negative item. The companies that sell credit scores (or offer them for "free") can use different formulas to determine your score. Each of the formulas may assign a different value for the same item on your report, so obviously they will come up with different scores. To make matters worse, some of the formulas that are used are based on different scales. That means a score of 740 from one formula might be considered a good score, but 740 might only be a fair score from another.

One of the scores is much more meaningful than the others. Approximately 90% of all lenders look at FICO scores when they are evaluating applications for credit cards, loans and mortgages. When you look at your FICO score, you see what lender will most likely see. A FICO score is determined by a formula that is only used by FICO (formerly the Fair Isaac Corporation). Companies that do not have access to the FICO formula have created their own formulas as a way to compete with FICO. These other formulas can only give you an estimation of your FICO score.

These other scoring methods can be quite accurate. There's a chance that you might even get your exact score, but you won't know for sure. If your score is off by just one number, it could make a difference in the interest you pay or it could even mean the difference between getting approved and being denied. For example; let's say you got a 740 from one of these estimated scores. You go to a lender for a loan or a mortgage and they say that 740 and above will be approved, so you go ahead and apply. They check your FICO score and it is 739 so you are denied. If you had known it was only 739, you might have been able to do something about it. Even waiting a month or two could have raised your score by one point.

How can you tell which credit score you will get when you respond to one of the offers? The offer will state which scoring method they use either at the bottom of the offer page or buried in the fine print of their "terms and conditions". CreditScore.com and FreeCreditScore.com say the score they give is "Calculated on the PLUS Score model... and is not the score used by lenders". FreeScoresOnline.com states that "any credit scores provided to you... are not FICO scores". I could go on and on with these disclaimers, but you get the idea. They are not giving you your FICO score. They are not offering the same score that lenders look at, so why waste your time and possibly some money getting the wrong score?

The best way to check your credit score is to get it directly from the source for FICO scores. Go to myfico.com. They offer a 10-day free trial of their Score Watch service. With this trial, you will get your FICO score along with your Equifax credit report. Just be sure to cancel within the ten days or you will be committed to a 3-month service for $14.95 per month. Another choice they have is a one-time charge of $19.95 which gets you instant access to your FICO score, TransUnion credit report and Equifax credit report.

I am not trying to sell FICO services. I am not employed by them and I receive no compensation for recommending their services. I don't like their apparent monopoly on credit scores any more than you do. But until something better comes along, FICO is the best way to check your credit score.

Ron Wynn has been a featured writer for over three years on a variety of consumer credit sites including http://www.creditdebtadvice.net/

Article Source: http://EzineArticles.com/?expert=Ron_Wynn

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How to Fix Your Credit Score - What You Must Know

Unless you've already got a very high credit score, one in the 800 range or better, you need to know how to fix it. Your credit score follows you around like a lost dog looking for a home, and can not only get you the financing you need for a home or car, but can get you the best rates too. To top it off, your credit score helps control how much you pay on everything from credit to life and car insurance. As such, your credit score is one of the most important numbers in your life except for maybe your blood pressure and cholesterol, and a low credit score can raise your blood pressure to unhealthy levels.

These days your credit score is vitally important. That's true not just when trying to get credit, as in the past, but for many more mundane parts of your daily life. One are where credit scores are used extensively is in the insurance industry. Many service providers, such as insurance companies have found they can correlate risk to your credit score with a fairly high degree of accuracy. You know what that means; as your credit score falls, your insurance rates rise.

Another area that you may be aware of where your credit score can make a big difference is the rental market. You may find yourself hard pressed to rent an apartment with an abysmal credit score. In some tight rental markets, your score doesn't even have to be all that bad. If the market is tight, landlords can afford to be more selective, and one of the criteria they'll use to help select renters is their credit score. Experience has shown that, as with insurance, there is a correlation between the reliability of a renter and their credit score. The lower the credit score, the more the landlord has to worry about.

On top of all these other things, a low credit score will of course make it more expensive to get credit of all kinds; from auto loans to mortgages. With the recent shakeup in the sub prime mortgage market, prospective borrowers may find it difficult to secure a mortgage if their credit score strays too low.

Given the disaster that is a low credit score, if yours is low, you'll probably be looking for ways to fix your credit score. It is possible to fix your credit score, and there are some basic techniques you can use to do the fixing. First and foremost you should order a copy of your credit report from one of the three major reporting agencies; TransUnion, Equifax, or Experian. You are able to order one report free of charge each year from each of the agencies. You should stagger them so one will arrive approximately every three months. You'll use the first one as a baseline so you'll be aware of any future changes.

Once you receive your free credit report, set about poring over it thoroughly so that you can determine if there are any errors. It's not at all uncommon for credit reports to contain mistakes. In fact, according to recently published estimates, between 20 - 25% of credit reports have mistakes that can affect your credit score. Sadly, it's usually for the worse. If you do find any mistakes, you'll have to contact the creditor and the reporting agency to get them cleared from your report.

Once your credit report is accurate, you'll want to raise your score as high as possible so you can get the best interest rates and other credit terms. First of all, there are some things you don't want to do if you're aiming to fix your credit score. The most important thing not to do is pay your bills late. Late payments, especially those over 90 days, are disastrous to your credit score, so avoid them at all costs. In fact, your credit history is the most influential component of your credit score. It should go without saying, but keep accounts out of collection. Collection actions can follow you around for 7 years, and obviously have a negative impact on your credit score.

Your credit score is views recent credit history more heavily than your activity farther in your past, so if you've had a few fairly recent late payments, simply waiting for a year or so while continuing to pay your bills on time will raise your score too. After the late payments are approximately 24 months behind you, they will not have the same impact on your score.

If your balances are high, simply paying them down can have a dramatic, positive effect on your credit score. Reducing high balances on revolving accounts will go a long way toward fixing a low score. This has an effect on 2 key components of your score; credit utilization percentage and total outstanding debt. Together, these 2 factors account for about 40% of your credit score, so you can see how optimizing them will help fix your credit score. The credit utilization score indicates someone's available revolving credit as a percentage of their total revolving credit. For example, if you have 4 credit cards with limits totaling $20,000, and you owe $10,000 on them, you have a 50% credit utilization score.

Something else that is affected by high balances that's not actually part of your credit score, but does affect you ability to get a mortgage is your debt to income ratio. Although your amount of total debt is a very large part of your credit score, the actual debt to income ratio isn't. Typically, lenders want to see both a high credit score and a total debt to income ratio of less than 36%. They'll use these when calculating how much home you're able to afford, and if they'll extend financing to you at all.. In the opinion of many financial advisors, 36% is way too high and leaves precious little room for error down the road. A figure of 20 - 22% is a more conservative number many experts are far more comfortable with.

Other things that are used to calculate your credit score are the length of your credit history and the number of recent credit inquires by prospective creditors. The length of your history can be fixed by simply waiting for a period of time after you have opened your first credit accounts. That will lengthen your credit history.

Credit inquires by creditors are known as "pulls" in the credit industry. There are 2 types; hard and soft. You need to be concerned only with hard pulls. They are generated when a prospective creditor checks your creditor. That happens every time you apply for credit, weather it's for a store card, a major credit card or a car loan. Every one of these will lower your credit score by about 5 points for 6 months, so if you're going to be financing a car or getting a mortgage in the near future, do not apply for other credit. The exception to this would be if you have no credit at all and are trying to establish a credit history before applying for your loan.

If you know you'll be financing a vehicle or getting a mortgage in the near future, a little legwork on your credit score no could save you big money for years to come. So, stay away from late payments, but almost as important, you must keep you debt at manageable levels.

The average American has over $8,000 in credit card debt. In today's society, it's essential that your credit score is as high as possible. Not only will a high credit score allow you to get the financing your need such as mortgages and car loans, it will literally save you thousands of dollars doing so. For special strategies to fix your credit score, go to the fix your credit score guide.

Article Source: http://EzineArticles.com/?expert=Steve_Faber

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How to Fix Your Credit in 6 Months or Less

If your credit situation is less than ideal and you are trying to buy a home, you probably are interested in repairing your credit fast. While there are certainly things that you can do to quickly improve your credit situation, it is important that you have realistic expectations. If you have had a recent foreclosure or bankruptcy, it simply is not going to be possible to repair your credit quickly. However, if most of your recent bills have been paid on time and your problems are a bit older, there is quite a bit that you can do to improve your overall credit situation.

The first thing you will need to do is get a copy of your current credit report. It is a good idea to go ahead and pay for your score, because that is the only way you are going to truly understand how far you have to go.

Once you have your credit report, review it very carefully. The first step of credit repair is cleaning up any errors that are dragging your score down. You can also dispute legitimate negative accounts, as there are methods that you will want to use later that will require you to have done this. You will need to dispute these accounts immediately with the credit bureaus. It is best to do this via certified mail, return receipt requested. One important thing to note is that you do not want to dispute too many accounts at one time. Stick to no more than four accounts.

Once you have the results of your disputes, you will want to move on to the next step for any accounts that were not successfully removed from your credit report. Depending on who is currently servicing the accounts, you will want to go through the 623 method or the debt validation method. In both of these strategies, you are dealing directly with the account holder and requiring them to prove to you specific information regarding your account. If they cannot do this, they are not legally allowed to report to the credit bureaus.

If these methods are not successful in getting a negative account removed from your credit report, you will want to do a pay for delete. This is where the creditor agrees to remove an account from your credit file in exchange for you paying the account in full.

While you are working on credit repair, don't forget that paying down revolving debt is one of the best ways to improve your credit score.

To learn more about the strategies I use to clean my credit and how to stop repossession please visit us at CreditRepairCollege.com.

Article Source: http://EzineArticles.com/?expert=Wendy_Polisi

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How To Fix Your Credit

Can't Qualify for a Mortgage? Here's How to Fix Your Credit

If you've been denied for a mortgage loan because of your credit, it's not the end of the world. Millions of Americans have credit scores lower than they'd like, and typically anything under 620 can cause you to be denied for loans.

Granted, your credit score can't be fixed overnight, but there are some steps -- both short-term and long-term -- that you can take to improve your score. If follow these guidelines, you can repair your credit over time and hopefully get approved the next time you meet with a lender!

1. Check your credit report

You are allowed to check your credit report from all three major credit bureaus (Equifax, Experian, and TransUnion) for free, once a year.

The bureaus won't provide your score for free (you have to pay them for that), but it is still important to see what information they have about your past credit transactions. That way, if something is wrong, you can correct it.

After all, if you paid a bill on time -- but it was reported by a collection's agency as not paid -- you're going to want that false information removed.

2. Make sure you have a credit card

There are two types of credit that are reported to the credit bureaus -- revolving and installment credit.

Installment credit is bills that you pay a certain amount towards each month -- like your car payments, mortgage payments, student loans, etc.

Revolving credit means credit cards. It's revolving because your balance due can change each month, depending on how much you charge to the card.

The bureaus like to see that you have both revolving and installment credit, and that you pay both of bills on time each month.

If you don't already have a credit card, apply for one. If your credit score is too low to obtain one, go to your local bank and ask for a secured credit card. That means you'll have to deposit money onto the card before you can use it. It's not as helpful as a traditional credit card, but it still counts as revolving credt.

3. Keep your credit card balance low

Credit bureaus like to see a large gap between your credit card's maximum limit and your current balance. Typically, credit experts will tell you to try and keep your balance at no more than 30% of the card's maximum limit.

That shows that you have credit, use it, and pay it off, instead of the alternative -- that you are behind in payments or maxing out cards.

Even if you pay off your balance in full each month it's a good idea to keep charge amounts low because the total balance of the card is reported to the credit bureaus each month.

4. Take out a small loan

If you take out a small personal loan from the bank, and pay it back over time, it can help your credit score.

Once again, it will show all three major credit bureaus that you are responsible and pay your bills on time.

Typically, local banks and credit unions will give you the best deal on a small loan, so consider stopping by and seeing what kind of deal they can give you.

5. Use more than one card

Having a seldom-used card can't hurt your credit score, but it also isn't helping you either.

Active credit accounts affect your score more, so instead of charging $500 to one card, put $250 on your normal credit card, and dig out that old one you barely use from dresser drawer and put the other $250 on it.

By charging to both cards -- and paying off both cards -- it shows credit bureaus that you have two accounts to which you are making on-time payments.

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