Archive for June, 2010
Unmet financial obligations results in extreme stress. This emotional turmoil is a by product of mounting bills. Sometimes it never seems to end, and you wonder how this all started.
If this sounds like you than you are more than likely the victim of the credit treadmill. This is not a cycle that is easy to get off, nor is the problem immediately noticed.
The Stress of It
The financial burden felt actually affects a person in difference ways. For instance, a person’s sleep may be disrupted. It can ruin you, as you continue to pull your hair out.
Even health problems could occur as a result of the stress. This then adds to the pile of bills because now you need to take care of yourself medically, and that can be expensive.
The opposite is true as well. Knowing that you are working toward wiping out outstanding debt helps enormously. The weight is starting to be lifted off of your shoulders.
This is one reason why it is time to not procrastinate any more. This is one reason why you decided to seek a copy of your credit report. You need to face the really bad music and learn how to play it better the next time around.
Improving your credit score is one reason to monitor your credit report on a regular basis. However, staring at your history of bad mistakes is not going to solve the problem.
You also need to take action. For instance you can do the following:
Change your attitude about spending. For instance, leave home without your plastic when you go shopping. Only make purchases on them when it is an absolutely emergency such as when your car breaks down. Disciplining yourself will show you that you really can live with less material things.
Consolidate debts to aim for lower interest rates on money owed. In order for this process to benefit you, interest rate would be lower when all combined. It would not make any sense to include the bills that already have a lower interest rate than all your bills added together.
Switch to using debit cards when making necessary phone and online purchases. This will help prevent loss of large sums of money in the event of identity theft, which provides you with a piece of mind.
Negotiate unpaid balances. This will help you settle debts much faster. The one clinch about this of course is that “settled in full” or similar phrase does not look as good on your credit report as would “paid in full.” Still, it is a step forward.
Deal with living a little bit less of a luxurious lifestyle. For instance, you can lease a less expensive but just as attractive apartment. You could also purchase a less luxurious car, and you can find just as high quality clothes at thrift stores.
Prioritize your bills. Of course it is not right to ever be late on any bills. However, you need a place to live and you need electricity. You also need your car if you live too far away. However, you can probably let your phone bill slide a few days.
While trying to seek your credit report there are a number of ways that unscrupulous thieves can take advantage of you. They will find any way to steal your identity and one way would be for them to offer fake “free credit report” opportunities.
The main way they get you is to require a credit card even if it is supposed to be a free trial. However, sometimes they try to cancel and put additional charges on top of the ones you already made.
They also then try to make it difficult for you to cancel your free trial. Then you are stuck paying probably for additional services you no longer even want.
Make sure you go to a recommended source to obtain a free credit report. Annual Credit Report.com is probably your best choice, but any comparable to this that are reputable would be fine.
If you must use a credit card because you think the additional credit monitoring services may help you then keep the following in mind:
- Never sign up unless you know the server is secure. This will prevent third-party fraud.
- Never give your credit card number to a company that you do not recognize. This will reduce risk of later becoming the victim of unauthorized charges.
- Make sure you verify the name of the company providing credit report monitoring services. Verisign seal information is one way to do this, or you could check with the Better Business Bureau if you have any doubts.
- Only fill out the information that is required. Be very careful about to whom you give your social security card, driver’s license, birth date, and other information.
- Do not pay for any services you could get for free. For instance, you can have free fraud alerts placed on your annual credit report.
One of the most popular methods of calculating a credit score is using the FICO numerical scale. This is done to help put a rating that pertains to various aspects of your credit rating.
What it Means
The credit score scale determines whether or not you have poor, fair, good, excellent, or perfect credit. This is what will established a variety of things, such as how much interest you would pay on a credit card balance or how much of a down payment would be required for a home loan.
It might make or break a merchant’s decision to give you a car loan or to provide you with cell phone or ISP service. It is used to help gauge a variety of financial decisions.
Credit Score Calculation
To sum it up, 620 means good while below that is fair or poor. 723 is considered very good and 800 to 850 is considered perfect to almost perfect. A person with a very high credit score may be thought of as one with “A-1 credit.”
Similar point systems are used by Experian (the Plus score). There also is what is called the VantageScore. You may have heard of these but it is the FICO one that is used most often.
Certain aspects of your credit report make up for varying percentages of your credit score. The breakdown is generally as follows:
Debt to income/assets ratio-30%
Length of credit history-10%
Types of credit-10%
Number of inquiries-10%
This is subject to change but as of now this is common knowledge among consumers and experts. This is generally speaking the major components of credit score calculation.
It helps to understand your credit rating-what it means exactly. This will help you prepare better for your financial future. This will help you improve your creditworthiness as an individual, or if you happen to have your own business.
The Meaning of It
An evaluation of your financial history is determined by the good and bad marks on your credit report. This is what makes up your credit rating, and it has meaning. It gives off major clues pertaining to your financial history.
For one, it shows how faithful you have been at making payments and it shows how likely you are to pay off a debt owed. Your credit rating also shows lenders one other very important thing-how much money you could reasonably pay back, and how long it would take you.
Your credit rating is calculated by different factors that give you a credit score. This is the numerical evaluation that may determine many things, such as the following:
- How much deposit you need to make when getting cell phone service
- How much of a down payment would be required if you were going to buy a house and needed financing
- The amount of down payment that would be established as necessary when its time to purchase a car
- The interest rate you would pay on a loan or a credit card balance
Credit Rating Calculation
Usually your credit rating would be calculated based on a number of aspects. For instance, it will be determined by your loan repayment history, amount of credit used, interest owed, savings patterns, or spending patterns.
The calculation of your credit rating would also be determined by number of inquiries you have on your records. In other words, the number of times you have applied for financing of any kind would affect your overall credit score.