Two of the best ways an American consumer can obtain his national credit score is by contacting one of the three major credit-reporting agencies on the Internet or in writing. They are Equifax, Experian and TransUnion. The three major credit-reporting bureaus may produce or generate three different national credit scores primarily because the credit history at each bureau is usually different. Loan officers make decisions to extend consumers credit generally based on just one national credit score.
What is a Good National Credit Score?
The lowest national credit score starts at 300 and the highest is 850. The average national credit score is 600 to 700, and the higher the score the better. Consumers with a national credit score above 700 enjoy the most favorable lending terms and the lowest interest rates. Consumers with a national credit score below 600 are identified as high risk and are usually offered the least desirable lending terms with higher interest rates.
How Are National Credit Scores Calculated?
National credit scores are calculated by taking several factors into consideration. The payment history of the consumer accounts for about 35 percent of the overall score. Payment history identifies if loan payments have been made on time, the number of late payments and other negative payment entries like liens and bankruptcies.
The total amount of debt owed on credit accounts represents 30 percent of the national credit score. High debt to income ratios lowers the overall national credit score.
A longer favorable credit history contributes 15 percent to the national credit score while new credit represents 10 percent. The remaining 10 percent is made up of other factors such as the different types of credit. Having a good mix of credit including credit cards and installment loans such as a mortgage or auto loan can add slightly to a credit score.
Improve Your National Credit Score
If you need to improve your national credit score, it will take some time, up to 12 months if your score is below 600. One of the best ways to improve your national credit score is to make all credit payments on time. Second reduce the amount of debt that influences your national credit score. If your national credit score is below 600 because of too little credit history, consider opening one or more secured credit card accounts. Secured credit card accounts require the credit card holder to secure the credit limit with cash.
Reporting Inaccurate Information
It is not uncommon to discover inaccurate information on your national credit report that has a negative impact on your overall score. Correcting these inaccuracies is imperative and fairly easy to accomplished. Contact the credit-reporting bureau that is reporting the inaccurate information in a letter that disputes the incorrect entry.
Protect Your National Credit Score
Protect your national credit score by making sure that the information is 100 percent accurate. Inaccurate or erroneous entries on your national credit report will lower your score and can cause long-lasting negative effects on your credit score.
A careful review of your national credit score should be made annually if there have been no "Identity Theft" issues. Consumers who, in the past, have had problems with identity theft or inaccurate entries should check and monitor their credit reports quarterly.
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