The Advantages of Credit Rating Agencies

The major credit-rating agencies serve a vital function for American businesses and consumers. They assess risk in order to curb potential losses that can result from reckless lending practices. The major U.S. rating agencies for business are Moody's Investors Service, Standard & Poor's, Dun & Bradstreet, Fitch Ratings and A.M. Best. Banks rely upon TransUnion, Experian and Equifax in the consumer sector. Assessing Risk Banks must have an independent way to determine the creditworthiness of consumers before extending loans and issuing...

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How Long Does a Credit Inquiry Affect a FICO Score?

A credit inquiry occurs when a creditor obtains your credit score when it checks your credit. Only credit inquiries that result from you applying for new credit, such as a new car loan, affect your FICO credit score. The FICO score is the most widely used credit score, calculated using the algorithm developed by the Fair Isaac Corporation. Time Frame According to the Fair Isaac Corporation, credit inquiries affect your credit score for one year. However, they appear on your credit report for two years. Features Certain inquiries...

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How Will a Child's College Loans Affect a Parent's Credit Rating?

A parent may not think twice about co-signing a student loan to help his child finance a college education, but this could have significant consequences for the credit ratings of the child and the parent. On the other hand, this might help the child begin to build a credit history when he graduates. However, the parent should be prepared to repay the loan if he put his name on it. Identification A college loan only affects the parent's credit rating when one or both parents put their names on the promissory note, called co-signing. Once...

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How Long Do Tax Liens Stay on Credit Reports?

An IRS tax lien can prevent a consumer from getting the financing and credit they need, and it can also mean that the IRS has access to your personal property. A tax lien may sound intimidating, but it is a simple legal process. As long as a consumer understands what a lien is and how to properly address it, then it can be removed from a credit report eventually. Identification A tax lien is the way that the IRS can use to collect back taxes that are due. When the IRS files a tax lien, they are able to have an influence over every aspect...

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How to Get a Very Good Credit Score

Getting a solid credit score is not difficult. It is simply a matter of responsibly handling your credit lines and faithfully paying your credit card bills. If you pursue this strategy and more, attaining a desirable credit score becomes just a matter of time. Instructions 1 Obtain a copy of your credit report. You can get a free report annually from each of the three credit agencies (see Resources). Review each report, checking for any inaccurate...

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Individual Credit Solutions

Improving your individual credit score helps you get financing without the assistance of a co-signer, who is someone with good credit who agrees to apply for a loan with you. Bad credit can result from delinquencies, excessive debt and other poor habits. But solutions can help fix credit problems and slowly increase your score. Credit Delinquenices A major key to solving personal credit problems is changing the way you manage your bills with creditors. Every late payment and every missed payment shaves points off your personal credit score....

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What Are the Benefits of a Good Credit Score?

Your credit history is shaped by a number of factors, such as how much of your available credit you use, whether you make payments on time and whether you've been through a bankruptcy or a foreclosure. Rather than analyze every wrinkle of your credit, lenders may look up your credit score, which combines all the details of your history into a single number. Formula The Fair Isaac Corporation developed the concept of credit scoring and the software and systems to do it, which is why your score is often called a "FICO" score. While FICO doesn't...

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How to Create a CPN Number

Credit profile numbers are often promoted as a way to get a fresh start and have a brand new credit score. However, the law is meant to protect the privacy of those who do not want their identity stolen. The CPN number is only used for credit profiles and is not a Social Security number substitute. The number was a creation of the 1974 U.S. Privacy Act Title V, which prevents banks from denying you credit because you refuse to share your Social Security...

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Secrets to Boost Your Credit Score

While different formulas exist for calculating your credit score, all credit scoring algorithms use the current and past account information contained within your credit report to determine your credit rating. Your credit score will naturally improve over time if you practice good debt management habits and pay your creditors in a timely manner. There are, however, actions you can take to boost your credit score more quickly. Increase Credit Limits If you carry credit cards or other open lines of credit that appear on your credit report,...

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How to Fix My Credit After a Vehicle Repo

Lenders providing car financing usually include provisions in their contracts permitting vehicle seizure when borrowers miss a payment, according to the Federal Trade Commisson (FTC) website. This action is known as a vehicle repossession, and it remains on Experian, Equifax and TransUnion credit reports for seven years. Thus, a repossession lowers your credit score, making it more difficult to get other loans; however, you can mitigate the damage with some repair work. Instructions 1 Send payments to catch up any other accounts with past...

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How to Remove Obsolete Credit Information

It's always a good idea to check your credit reports to see what information about you is being displayed. Lenders and other companies interested in your creditworthiness will check your credit history to see whether or not you are a good risk. If any information is obsolete, you can request that it be removed from any or all of your credit reports. This will ensure that third parties get a fair and accurate assessment of your credit history. Instructions 1 Go to annualcreditreport.com and view all three of your credit reports: TransUnion,...

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When Are Student Loans Reported on Credit?

Student loans come in many varieties and sizes. Both the federal government and private lenders issue student loans to help students meet the financial burdens of their education. These organizations can tailor a student loan to meet nearly any level of financial need. Student loans are reported to the major credit bureaus just like any other financial obligation. Before taking out a student loan, it's important to understand the impact borrowing this sum of money has on your credit. Before Signing Before the promissory note is signed,...

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How to Get Your Average Credit Score

Your credit score is a measure of how trustworthy you are with money, gives creditors information about how reliable you were in the past about paying back debts and tells them how risky it would be to lend you money now. The information that is used to calculate your credit score is reported to three credit bureaus: Experian, Equifax and TransUnion. To find your average score, you will have to see all three reports. Instructions 1 Go to AnnualCreditReport.com...

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Is a Credit Score Affected If Someone Conducts a Credit Check?

A person's credit score ranges from 300 to 850 and provides lenders with an estimation of how much of a credit risk that individual is. Whether conducting a credit check affects the individual's credit score depends mostly on who initiates the credit check. Types Credit checks fall into two major categories. A hard pull is a credit check in response to an individual's application for credit. A soft pull is a credit check for a pre-approval,...

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What Is the Fastest & Quickest Way to Establish Good Credit?

Good credit is the gateway to purchasing power without having to produce cash upfront. To establish good credit the quickest way, you will need to make an effort to obtain credit accounts that are valuable to your credit status. Additionally, once you start using the accounts, you will need to demonstrate your creditworthiness through responsible decisions and actions. Applying for Credit When you apply for credit you will want to make sure...

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Does Your Credit Rating Affect Your Car Insurance Premiums?

Credit ratings reflect a consumer's financial health at a given point in time. A credit rating, or score, is calculated on the basis of five primary factors, some of which weigh more heavily than others. Consumers with low credit ratings have difficulty qualifying for loans and credit cards, but credit ratings also affect home and car insurance premiums. Ratings Credit ratings are numerical indicators that potential creditors, insurance companies and some employers use to assess the risk of lending money and insuring or hiring someone....

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Will a Settlement Hurt My Credit?

If you have a debt settlement on your credit record, it may take your credit score awhile to recover. For several reasons your credit score will suffer as a result of settling a debt (or multiple debts) with your creditors. You should develop a solid recovery plan to repair your credit. Stop Payments Creditors typically will not consider negotiating a debt settlement until you are about six months behind on your bill payments. They have no reason to settle with someone who is making regular payments. If you fall behind on your payments,...

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Does Closing a Credit Card Decrease Your Credit Score?

A FICO credit score contains five key variables: the amount of debt you owe, payment history, types of credit used, length of credit history and the amount of new credit applied for recently. The score ranges from 300 to 850. Closing a credit card can impact certain variables of the score and has the potential to decrease it. Scores Thirty percent of the score reflects the amount of debt you have. This percentage considers your credit utilization ratio as part of the calculation. According to FICO, this ratio measures how much available...

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How Much Does Charging More Than 1/3 of Your Credit Limit Hurt Your Score?

The FICO scoring model counts the percentage of the credit limit you use -- known as credit utilization -- in its calculation of your credit score. A lower credit utilization ratio improves your credit score, although it is difficult to determine how much a particular credit utilization percentage affects your score, because many other factors come into play. Identification There is considerable debate about what a suitable credit utilization percentage is. The Credit Scoring website references a number of sources on the subject, with...

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Ways to Improve Your Credit in One Year

The FICO credit score is the most widely used credit score in the United States. The score measures how well you have managed your credit in the past and predicts how likely you are to default on loans in the future. Creditors look at your credit score when deciding whether to approve you for a loan and how much interest to charge. If you plan to take out a significant loan in the near future, such as a car loan or mortgage, improving your credit...

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How Is FICO Score Different From a Credit Score?

Determining the difference between a FICO score and a credit score can be confusing, because they are often based on mutually inclusive information and sometimes may actually be the same number. Both are evaluations of a consumer's credit worthiness. However, a FICO score is derived from a consistent formula, while a credit score is determined by varying formulas, from lender to lender. History The acronym FICO comes from Fair Isaac and Company,...

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Why Is it Important to Raise Your Credit Score?

The sub-prime mortgage crisis caused lenders to tighten their credit criteria. A credit score that once had lenders beating a path to your door and offering their keenest rates may no longer have the same effect. If you want to obtain low interest rates and the most competitive prices across a range of essential services, you may need to raise your credit score. Lenders Whether you are applying for a mortgage, a new credit card or an auto...

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How to Improve a Credit Score by 100 Points

Banks and other institutions are becoming more conservative with lending money, so a hit to your credit score could stop you from getting approved for a car or house loan and may cause your annual percentage rate to skyrocket. Credit repair is a long process, but it is possible with consistent effort. With perseverance, good financial planning and a little luck, you can raise your score by 100 points. Instructions 1 Pay your bills on time....

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Does Opting Out of Changing Credit Terms Hurt Your Credit Rating?

The Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 put heavy restrictions on the entire credit card industry, such as requiring credit card companies to allow people to opt out of changes to the terms of their account. Opting out almost always entails closing the account. While opting out may help you to control your finances or get you out a higher interest rate, you can probably expect your credit score to drop. Identification Closing a credit account makes it appear as though you need more of your available...

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