What Counts as an Account on a Credit Score?

Your credit score is one of the main determining factors that determines if you are eligible to borrow money and what kind of interest rate you will receive. Your FICO credit score can range between 300 and 850 points. The higher your credit score, the lower the interest rate you can receive on a loan. Your credit score is determined by evaluating the accounts you have opened.

Revolving Accounts

Revolving accounts have a different balance due each month. A credit card account is a good example of a revolving account. Other types of revolving accounts include retail store accounts and home equity lines of credit. A debit card is not considered an account on your credit report.

Installment Accounts

An installment account has a fixed payment each month. You often are under contract or are otherwise legally obligated to make payments on these accounts. An installment account may include signature loans, auto loans and home loans. A student loan also is an installment account. An installment account may have a fixed or adjustable interest rate.

Open Accounts

Open accounts occur less frequently on credit reports than installment accounts or revolving accounts. Your cell phone account is an example of an open account. Debtors expect that these kinds of accounts will be paid in full at the end of each payment period. Other types of open accounts may include electricity, gas, water and cable.

Closed Accounts

A closed account is no longer active. It may be listed as "closed/current" or "closed/never late." This means exactly as it says -- that the account was closed in good standing. Closed accounts that were closed in poor standing will say something like "closed/90 days delinquent."

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How to Acquire Aged Primary Credit Tradelines

Building (or rebuilding) credit is both frustrating and time-consuming. Using any of the "sub-prime" credit card offers can cost you in higher interest rates and fees. With the higher score requirements of banks now, it is harder than ever to get approved for prime credit rates. Aged primary credit tradelines are older, well-seasoned accounts that someone carefully maintained to build great credit. Acquiring those aged credit tradelines before applying for new credit can increase your scores so you get better approvals and lower interest rates.

Instructions

1

Go to annualcreditreport.com to access your credit reports. You can do this once per year at no cost. You can also request credit scores, but there is a small cost for these. When you receive your reports, check them for duplicated accounts, outdated entries and errors. You should dispute these by calling the customer service number listed on the first page of each report, and be sure to follow up in writing. Doing so will help increase your scores. This process will take up to 30 days. Ask for corrected reports with the updates to be sent to you.

2

Talk with your parents, spouse or other relative about adding you as an "authorized user" on one of their old, well-established credit card accounts. Doing this will add that card account's entire history to your credit report, which will help increase your credit scores. You would not need to actually use the card to have this benefit. This process is commonly referred to as "piggybacking" credit card accounts. There are companies that "rent" this service of adding you to an account for high fees. You are taking a risk in using companies such as this since you know nothing about the owner of the card. It is much safer to work with someone you are close to, since you know that person's financial habits.

3

Stay in touch with the card owner to find out when she actually called her credit card bank so you will know when to expect the credit card history to hit your credit report. This usually takes 30 to 45 days, depending on the reporting cycle of the bank. Wait the allotted time, and re-pull your credit reports to see if the account is there. If it isn't, wait another 30 days, and request your reports and scores again.

4

Consider going to your credit union or bank and applying for a small credit card account to help you build your credit. Now that your scores have increased, you might get a fast approval.

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How to Reduce a Debt to Income Ratio to Improve My Credit Score

Several different factors impact credit scoring. Having a high debt to income ratio can lower your credit rating, and even disqualify you for a loan. Lowering your debt to income ratio is one of the keys to building a good credit rating, and by lowering your debts, you'll create more disposable income. Fortunately, there are numerous ways to accomplish this goal.

Instructions

1

Calculate your debt to income ratio. Collect your credit card, mortgage and loan statements and calculate your total debt payments by adding up the minimum monthly payments. Take this number and divide it by your gross monthly income to determine your ratio. A good debt to income ratio is less than 36 percent.

2

Assess your household budget. Gather your monthly statements and calculate your total monthly expenditures. Subtract your essential monthly expenses such as housing, transportation, insurance, food and minimum debt payments from your total take-home income to determine your disposable or extra income.

3

Get rid of debt. Assign a proportion of your monthly disposable income to make extra payments towards your credit cards and other smaller loans. Talk to a mortgage broker and discuss the option of paying off debt with a home equity loan or refinance. If this isn't feasible, contact a non-profit debt consolidation agency, who'll help you obtain a lower interest rate on your bills and show you how to manage your accounts until you're debt-free.

4

Decrease monthly expenses. Consider downsizing to lower your housing expense or trade-in your automobile for a less expensive car. If this isn't possible, cut back in other ways. Eliminate cable services, cancel your landscaping service, cut out expensive hair appointments or other discretionary spending. Establish a strict budget each month for extras like eating out and entertainment. Use this extra "found" money to pay off debts.

5

Increase income. Once you've done everything you can to lower your debts, brainstorm ways to increase your monthly income such as asking for a raise, looking for a better paying job, taking an additional part-time job, or making money with a side business.

6

Recalculate your debt to income ratio. Once you have followed the steps above, do the math to see how much you have lowered your debt to income ratio. If you have managed to bring it below 36 percent, this should have a positive impact on your credit score.

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How To Report Attempted Identity Theft

Identity theft is one of the fastest growing crimes in the country. Marsh & McLennan Companies states that nearly 3.25 million Americans have been the victims of identity theft or misuse of personal information. The crime does not just affect the consumer. The FBI estimates that businesses lose over $67 billion annually to computer crimes and identity related incidences. If you suspect any type of misuse with your credit accounts, there are steps you should take immediately.

Instructions

1

Contact your financial institution. Call the customer service line and ask to speak to the fraud department. Ask for fraud dispute forms. Even if a representative takes down all the details over the phone it is important that you put your dispute in writing. Log all your calls and keep a record of who you speak to.

2

Contact the authorities. File a police report in the area where you think the fraud occurred. Request an identity theft report. If the police don't have one, file a standard incident report. Contact the Federal Trade Commission. The FTC cannot pursue the case from a law enforcement capacity, but can share your case with other law enforcement agencies for investigative reasons.

3

Notify all other financial institutions you use. Contact them even if your other accounts have not been tampered with or compromised. They can place a fraud alert on your account in case the problem is worse than you originally thought.

4

Contact the credit bureaus. The three main credit reporting agencies are Equifax, Transunion and Experian. You only need to contact one and request a fraud alert for your credit report. The one you contact will notify the other two.

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How Do Inquiries Affect Your Credit Report?

Whenever a party obtains a copy of your credit report, the party's name is listed as having made an inquiry into your credit. This inquiry shows up on your credit report for any party that pulls your report in the future. In addition, some types of inquiries affect your FICO credit score.

Types of Inquiries

Credit inquiries can be divided into two major types. Hard inquiries are made by creditors in response to your application for credit. For example, if you apply for a mortgage at a credit union, the credit union's name will show up on your credit report as a hard inquiry. Soft inquiries include when you check your own credit, when companies check your credit to send unsolicited pre-screened credit offers and when a landlord, phone company or similar party checks your credit. Although both types of inquiries appear on your credit report, only hard inquiries affect your credit score.

Effects of Inquiries

Hard inquiries reduce your credit score. This is because FICO statistics show that people who have at least six inquiries are eight times more likely to go bankrupt than people without any inquiries. The logic is that people who are applying for new credit are more likely to be in financial trouble than people who are not applying for new credit. According to FICO, one inquiry reduces the average person's credit score by less than five points. However, people who do not have much credit history could see a greater impact from each inquiry.

Rate Shopping

The credit scoring formula compensates for the fact that people who are looking for a loan often generate many credit inquiries by getting rate quotes from multiple lenders. The newest scoring model FICO uses treats multiple credit inquiries for a mortgage, auto or student loan as just one inquiry if they are all made within a 45-day period. The older FICO scoring model limits the time period to just 14 days. To be safe, people should do all rate shopping for a specific loan within two weeks to avoid damaging their credit score with more than one inquiry.

Time Frame

Inquiries appear on your credit report for two years following the date of the credit inquiry. However, the formula that FICO uses to calculate your credit score only takes into account hard inquiries made during the past 12 months. In addition, the more recent the inquiry, the more it will affect your credit score. The exception is that, when shopping for a mortgage, auto loan or student loan, the credit score calculation ignores all inquiries made on the same type of loan within the past 30 days.

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How Will a Short Sale Affect My Credit If I Am Not Behind on the Payments?

Short sales are a relatively popular way to avoid foreclosure. Not only does this tactic save the debtor money on getting rid of his mortgage, it is much better for a credit score. Even if a bank agrees to a short sale when you are current, however, having the item on your credit report causes damage.

Identification

The short sale will affect your credit even if you have never missed a payment, because the creditor will more than likely report the account as in "redemptive" status to the credit bureaus. A short sale brings a score down by 85 to 160 points. Short sales are usually on the lower end of this spectrum, while a foreclosure will probably cause harm closer to 160 points. Therefore, a short sale is usually the better choice.

Benefits

The fact that you have never missed a payment is even better for your credit score. Having several payments 30, 60 or 90-days late leading up to the short sale hurts your score for years to come. Also, if you have a clean record, you can probably find another mortgage again rather soon. The typical borrower that goes with a short sale gets another home within two years, according to ABC 15 Arizona.

Considerations

Lenders rarely approve a short sale if you are current on your payments, because short sales are generally only approved when it appears the borrower might have to go into foreclosure, according to Bills.com. This arises from the perception that if you can afford your payments right now, there is no need for the bank to risk a loss with a short sale. If you did have a perfect payment history, you would need to prove some sort of hardship.

Warning

Most states, except for a few like California, allow creditors to go after any balance left over from a short sale. If you cannot pay this deficient balance your credit score could see another big drop from the account going to collections or the bank getting a judgment. Lenders, however, often do not pursue deficient balances even in states that allow it. You should talk to the mortgage provider to determine how the company will handle this scenario.

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How Do Online Bank Loans Work?

The rise of online business transactions has resulted in more consumers choosing to apply for and close bank loans online. When applying for a bank loan you must fill out an extensive amount of paperwork, most of which can be completed online. Learn the ins and outs of applying for and finalizing online bank loans.

Applying

The first step of applying for an online bank loan is to choose a lending website. You can either choose a specific bank or a lending website that allows you to apply to more than one bank at a time. The application requests personal and financial details like name and address, employment situation and income. You must answer each question and then submit the information. The application goes directly to the lender's office for evaluation.

Preparation

You need a few key pieces of information handy to apply for a bank loan online. Besides the basics (Internet connection and compatible browser for the application website) you must also have your driver's license, Social Security number and recent income information handy. You should also have an idea of the terms you want for the loan, including the term in months, amount you wish to borrow and estimated payment you can make.

The Decision

After applying for an online bank loan the lender sends the decision either via email or in some cases right in your browser instantly. If the application meets the lender's requirements you receive an approval message with additional instructions to finalize the loan. For instance, you may have to provide documents proving statements on the initial application. Once all requirements are met, the lender commonly issues the money through an online transfer to your bank account or by check at your request.

Suggestions

Before applying for an online bank loan check your credit scores, from all three major reporting agencies (Transunion, Equifax and Experian) online. For your best chances of loan approval at the best available rates you should have a score of at least 700 (healthy credit). Lower scores may still garner an approval but may come with higher rates. Work on building up your credit history before applying for the online bank loan. You can dispute errors, get caught up on late payments and reduce existing credit balances to help boost your score and increase chances of approval.

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