How to Determine What is a Good Credit Score

What is a good credit score? When it comes time to borrow money for a house, car, or personal loan, people begin thinking about their FICO numbers. In fact, people should think about their credit each and every day. If you don't know where you stand in the eyes of your potential lenders, now is the time to find out. Here you will find out how to determine what is a good credit score.

Instructions

1

Pull your 3 credit reports and FICO scores. Although you are entitled to 3 free reports per year, that does not include your FICO. If you want to know what is a good credit score, however, you need to know where you stand.

2

Throw out the bottom and the top score. The middle is the one most mortgage lender will look at. Perhaps the term, "Throw out", is a bit rash. You must consider the top and bottom numbers to know what is a good credit score for you. Some lenders only pull from 1 financial bureau, so all are important.

3

Understand that FICO can range between 300-850. A score above 700 is considered high. If you want to know what is a good credit score, try to reach even higher. Anyone above 800 is considered fantastic.

4

Break it down even further if you want more explanation about what is a good credit score. Anything above 730 typically gets the best rates. 700-730 is good. 670-699 isn't great, but people can still get loans with decent rates. Anything below 650 is typically considered pretty poor.

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Free Fast Credit Repair Tips

Bad credit records haunt you when you try to get loans or credit cards. You may be tempted by ads online, on television or the radio offering to repair your credit, but the Federal Trade Commission warns that most companies do not follow through with their claims and explains that you can fix your records yourself for free.

Clean Your Credit Report

You may be able to clean up many negative entries on your Experian, Equifax and TransUnion credit reports if you can find any errors in them. There are mistakes in up to 25 percent of reports. The Fair Credit Reporting Act requires the credit bureaus to investigate if you dispute a mistake. Creditors frequently don't bother to respond, and the negative items must be erased under the law if it is not verified. Once they are gone, they no longer hurt your credit score or figure into lenders' decisions. You can check your credit reports for free every year through annualcreditreport.com, the FTC explains. Make disputes on the credit bureau websites or with letters sent through the mail.

Make On-Time Payments

FICO, the largest credit score compiler, recommends getting your payment record back on track if you've been late or completely missed credit card or loan payments. FICO cites paying bills by their due dates as one of the biggest factors in building or repairing credit. Mail payments early to account for possible postal delays or send them electronically so you can specify the date they reach the creditor. Every on-time payment counts towards credit repair because lenders put the most emphasis on recent activity.

Pay Down Debt

Your credit score is harmed by high balances on credit cards and other revolving accounts like those from retailers or gas stations, according to FICO. Channel as much money as possible towards reducing your highest balances every month. Redistribute the money onto your other debts once an account is paid in full.

Keep Using Credit

You get in trouble when you use too much credit, but you can't have a good credit score unless you are actively using accounts. You may need to get a secured credit card if your old issuers charged off the debt or you declared bankruptcy. People with bad credit still qualify for secured cards because they make a bank deposit as collateral. For example, you would deposit $500 with the card issuer and receive a $500 credit line. You use the credit card in the same way as a traditional account, and the bank reports your activity to the credit bureaus. This helps you as long as you manage the account responsibly. The bank seizes your deposit if you stop paying your bill.

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Who to Call for Updating My Credit Report?

The credit bureaus can be notoriously hard to contact -- Experian is famous for constantly changing its mailing address and phone number, according to the BCS Alliance. You usually do not have to call anyone to update your credit report. In some cases, you might have to contact a creditor or credit bureau.

The Creditor

Normally, creditors update their accounts every month, so you do not need to call them as a reminder. The only time you might want to call the creditor to update your report is when you find an error on one of your loan accounts. Since lenders are the source of information for the credit bureaus, they can correct mistakes by sending in new data.

The Credit Agency

Technically, consumers should contact the credit bureaus to correct a mistake or update a report, because they have the power to report to other lenders. Sometimes, however, calling a credit agency takes longer than contacting a lender because the bureaus receive thousands of disputes each day. On the other hand, there are some errors that only the agencies can correct, such as a judgment that does not belong to you or a false employment history.

Considerations

You probably do not even want to call a creditor or credit agency to update your credit report in a dispute case. Sending a certified letter gives you proof that the agency received your claim and you can include evidence to hasten the process. If you do have phone contact with the agencies, log all details of the call, including the name, supervisor and department of the employee and ask for a certified letter summarizing the interaction, suggests Bankrate.

Tip

In a worst case scenario where a creditor nor a credit agency will update your report and you feel you have enough evidence to prove a negative item is erroneous, you may need a lawyer. Some credit experts, such as Holden Lewis of Bankrate, even suggests calling a reporter to publicize your case.

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How to Get a Credit Report From Equifax

Equifax is one of the three major credit reporting agencies in the United States. This agency creates a credit report based on information furnished by your creditors. You'll find credit card, loan, mortgage and other type of credit accounts on your report. Any recent delinquencies, collection accounts or negative reports will also be included. Request a credit report from Equifax to confirm that your report has accurate information. You are legally allowed to request a free credit report from Equifax and two other credit reporting agencies once per year, through the Annual Credit Report site run by the federal government.

Instructions

1

Navigate to the Annual Credit Report website (see Resources).

2

Choose your state in the drop-down list and click "Request Report." Enter the requested personal information in the form. Click "Continue."

3

Check "Equifax" from the list of credit reporting agencies. Click "Next" twice. You will be redirected to the Equifax website.

4

Click "Continue" to view your Equifax credit report.

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How to Improve My Credit Score

In today's economic environment, you may be pondering "how to improve my credit scores". What most people do not realize is that increasing your credit score by 80 points can reduce the interest rate that you pay by 1.5%. This could potentially save you hundreds of thousands of dollars over the course of a 30-year mortgage.

Instructions

1

Pay Your Bills On Time - Everyone knows that you should pay you bills on time each month. What you may not realize is that every late payment shows up as a negative factor on you credit report. As soon as you get your invoice, rip it open, mark it on your calendar, and pay it BEFORE the due date.

2

Pay More than the Minimum Due - Most minimum payments are around 4% of the outstanding balance. Paying this amount really contributes to you having less wealth. Basically you are working hard to earn some money only to send it to the credit card companies at the end of the month. Do whatever you need to do to make some extra money. eBay, even with their ridiculous fees, is an easy way to reduce the clutter around your house and pay off some debt.

3

Do Not Skip A Payment - I think this is worth repeating - DO NOT SKIP PAYMENTS! If my goal is to increase my credit score and to become debt free, allowing the credit card companies to tack on interest and penalties is not the appropriate approach. Pay anything that you can each month, even if it is less than the minimum. Do not allow your accounts to be sold to a collection agency.

4

Do Not Close Old Accounts - One of the major factors in determining your credit score is how long you have had credit with each creditor. If your balance is zero, leave it open (unless there is an annual fee). Simply cut the card up to ensure that you never use it again.

5

Lower Your Outstanding Balances - You credit score is negatively impacted if you carry a balance that is more than 35% of your available credit. For example, if your available credit for Card 1 is $1000, you should not carry a balance greater than $350.

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Does My Credit Score Affect My Spouse's When We Marry?

Your credit score plays a significant role in your ability to be approved for loans and other lines of credit. Each individual has a credit history based on how their have handled your debt obligations in the past, which is used to calculate your credit score, a number between 300 and 850. The higher your score, the more creditworthy you appear so banks will be more likely to offer you a lower interest rate. Your credit score is based on your credit history alone and is not affected by your spouse's credit score.

Misconceptions

Some people mistakenly believe that getting married will result in your credit scores being combined when you tie the knot. However, just getting married has no impact on your credit score. Not only will you still have a separate credit score from your spouse, your prior financial activities will not play any role in calculating your spouse's credit score in the future.

Factors

Your credit score takes into consideration only the accounts with your name on them and does not include account information that applies only to your spouse. When looking at these accounts, the FICO credit score looks at whether you have paid your bills on time, how much you owe and how large your credit lines are, how long you've been using credit, how much credit you've applied for recently and the different types of credit that you've used.

Joint Accounts

You do not automatically become listed as a joint account holder on all of your spouse's accounts when you get married. However, should you choose to, you can open joint accounts that both of you will be legally liable for. These accounts will appear on both of your credit reports, for better or for worse. Even if only one person uses the accounts all on-time payments and missed payments or defaults will appear on both credit reports, which can have a significant affect on both credit scores.

Considerations

Even though your credit scores do not get merged when you get married, lenders will want to look at both your credit score and your spouse's credit score when you apply for a loan. If your new spouse has a lower credit score, you may end up paying a higher interest rate, or even being denied a loan or line of credit. Before applying for a loan, you should check both of your credit scores for errors and to know what to expect from lenders.

Benefits

Your credit score is solely your responsibility. Getting married cannot provide a quick fix for a bad score or a steep drop for a good score. Lenders do not expect a trip to the alter to magically change your fiscal responsibility for better or worse. In addition, if you end up getting divorced, you will still have a separate credit score from your spouse and you will not have to start all over to build credit from scratch.

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How to Understand Your Bad Credit Report

Many things can contribute to a bad credit report. Bad credit can remain on your credit report for seven years. Each item of bad credit has a certain designation for identification purposes. Items of bad credit can include bankruptcy, repossession, foreclosure, 30, 60 and 90 days past due, judgments and tax liens. After seven years, most bad credit items will automatically fall from your credit report. You can dispute any inaccurate or incomplete information.

Instructions

1

Determine which items on your credit report are charge offs. An account is reported as a charge off or loss when there has not been a payment in six months. Charged off accounts are assigned a credit rating of "9" on a credit report. The "9" can be preceded by an "I" for installment loan or an "R" for revolving account such as a credit card.

2

Locate and review your credit ratings. When an account is late by 30 days, it shows up on your credit file. If a payment is not made the next month, it becomes 60 days late. An R-1 or I-1 means that the account is paid on time. An R-2 means the account is 60 days past due; R-3 accounts are past due 60 days; an R-4 account is 90 days past due.

3

Take a look at trade lines. The information reported to credit reporting agencies are called trade lines. The information listed includes the name of the creditor, balance, date last paid, type of account and the credit limit. The credit rating appears at the end of the account to the far right.

4

Find your credit score. Once you establish credit, you are assigned a credit score. Credit scores can range from 300 to 850. The higher your credit score, the better terms and conditions you receive on credit products such as mortgage loans, lines of credit, auto loans and credit cards.

5

Review the effect bad credit has on your credit report. A foreclosure can reduce a credit score of 680 by 85 to 105 points; a score of 780 can be reduced by 140 to 160 points. Bankruptcies can reduce a score of 680 by 130 to 150 points and a score of 780 can be reduced by 220 to 240 points according to the website Credit Cards.

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