Archive for the ‘Credit History’ Category
The necessity of a credit history is a well known fact. Given that most aspects of life, from bank loans to employment prospects base themselves to a huge extent on the credit status or history of an individual, one of the prime actions that an immigrant to the U.S needs to focus on is building a solid credit history. Many immigrants are bogged down with the thought of having to start building credit status from scratch despite having had a steady history back home.
Why does this need arise?
Most financial authorities in the USA are not open to accept deposits as a way of gauging the credit worthiness of immigrants. Moreover, the non-validity of previous credit reports can be attributed to the fact that international laws do not permit access to credit reports outside the country. This makes the institutions seek a new credit history that the immigrant must build during his stay in the USA.
3 tips to help build credit history
1. Get yourself a secured line of credit in return of an account at any bank you may apply for a secured credit card. Pay your installments and interests acquired on the card on time, every time. This is the first way to gain trust in the eyes of the lenders. This also goes on to make an entry into your new credit report. Paying bills and installments on products purchased also add to the credit score. Make sure that there is no negative credit being built up by your spouse as well. Joint credit cards are a great option if the other half also has a reputable credit history.
2. Try talking over details of your previous history with the lending agency. In case your employer stands in as a guarantee for your credit worthiness, then the credit sanction takes place easily. Of course, the credit history needs to be built up simultaneously with this as well.
3. Most companies have their own set of ideas that help their employees build up fresh credit history. This could be something you could tap to get the maximum benefit. Above all, be prepared to give the ‘credit history build up’ some time. Though it might not happen overnight, waiting does pay. This is a tried and tested tip. Go apply for it without delay.
Immigrating has many responsibilities. Among these, the credit part calls for major attention. It is better to start building credit as soon as possible since the more you delay; there would be a longer waiting period for sanction of any finance related application. Conduct a research on what the nitty gritty of USA credit reports and histories are. This is an all-important step.
A credit bureau tacks and keeps a record of credit history and other financial information of an individual and determines the credit rating of an individual. Such credit ratings are useful to the lenders while lending their money to an individual. The lenders check the ratings and determine the risk in granting the loan. The higher the credit rating, the lower the risk and vice- versa. In addition, a low credit rating results in a higher rate of interest on a loan.
In the world of credit ratings, three credit bureaus are famous, namely Equifax, Experian and Trans union. These three credit bureaus maintain data regarding the credit rating of an individual and constantly share information with each other. Whenever an individual applies for a loan, the lender checks the credit report and score provided by these three credit bureaus. A credit bureau tracks an individual with the help of a social security number.
The three credit bureaus constantly update information provided by the creditors. Such information includes particulars about the date on which the account was opened, the credit limit sanctioned, the current outstanding balance and any default in the repayment of the loan. In addition to this, if the individual has closed the account after paying off all the dues, the report will show the details for a period of seven to eleven years.
The three credit bureaus also reply to any query made into a person’s credit history. The report contains the particulars of a person making the enquiry and the particulars of the query. However, the higher number of hard credit queries negatively affects the credit rating of an individual.
The reports prepared by these credit bureaus are considered as public documents and helps the lenders a great deal in determining the reliability of an individual. For instance, creditors will be hesitant in granting a loan to a person who has been declared bankrupt in the past as compared to a person with a clean credit report.
People have different views regarding the credit bureaus. While those with a poor credit rating consider it to be hurtful, those with a good credit record greatly benefit from it. The credit rating agency grants an opportunity of being heard to an individual before adding a potentially negative item to their credit report. Moreover, in some states the credit bureaus are required to give a copy of the annual credit report to an individual, which in turn allows individuals to keep his or her credit record under check.
One thing that can affect your credit the most is how much debt you are carrying on your cards. Thereofre, it may be time for you to finally get rid of some of your credit card debt.
Another factor is how close to the credit limit you are on each card. Any good credit repair company will tell you that it is best to keep your total balance below one fourth of your credit limit. This is for the total of all your cards.
If you want to continue to get rid of credit card debt here are some additional tips and facts:
Reduce the amount of interest paid while buying things with a credit card. You can do this if you pay back the balance within a 25 to 30 day grace period.
Remember that late payments appear on your credit file. Therefore, try to avoid allowing your balances to become past due.
If you are unfortunately already overwhelmed by the debt you have nationwide debt settlement options are available. This is a great place to go for educational advice on what financial options are best for you.
Seek all re-financing options such as consolidations before considering bankruptcy. You may also want to consider budgeting and debt repayment programs.
The devastating economic conditions right now have caused 60% of Americans in financial distress not knowing what to do. They also quite often do not know where to go for help.
Debt settlement is one option. This helps you eliminate unpaid balances by reducing the amount you owe, by as high as 50 to 70% (and in rare cases up to 100%).
However, this solution is not without its consequences. Using debt settlement could have a temporary negative impact on your credit file. Therefore, whenever possible it is in your best interest to do what you can to pay that account.
The idea is to do whatever you can possible to avoid charge offs, because this can also hurt your credit file. Apparently according to some sources debt settlements are like a charge off.
However, sometimes you have to do what you have to do. The key to all this is to help reduce chance of bankruptcy proceedings, as this is often thought of as a last resort.
When credit card accounts are settled, the creditor will notify the 3 credit bureaus within 30-45 days. Even though this may not always be the option that works for everyone, it can improve your debt to income ratio.
Nowadays, credit card companies are seeking ways to reduce risk. This is so they do not have to pay out as much money as they did in the past. This information was true as of September 2009, but new laws have changed since then.
A revelation of this information can clue you in onto some of the changes made before February 20, 2010. For instance, credit card companies who want to reduce risk have used one of the following three tactics:
- Some consumers have been hit with lowered credit lines. The general rule of thumb was that they wanted to lower the lines of credit to below the outstanding balances of the consumer.
- Other credit card companies are seeking ways to raise interest rates. This was done as a way to try to push consumers into making payments.
- Other consumers who have locked-in interest rates saw rises in minimum payments. This has causes the minimum payments of people to double and triple in some cases.
Options for Consumers
Upon credit card companies starting to take one of the above actions against consumers, these companies did make some offers to consumers. For instance, they were able to opt out of an interest rate increase.
This was done by way of closing the account and continuing to pay off the debt a little at a time-at their own pace. This of course is another action that causes damage to a person’s credit scores.
Upon talking to a credit counselor, some consumers were advised to call and re-negotiate interest rates. Some people were successful and some were not. In any case, many of these consumers (as well as the ones whose minimum balances were hiked) were force to seek funding elsewhere.
Laws have changed in 2010. There are certain actions that credit card companies cannot take that they could not before, and some of these apply to the three actions described above.
In any case, the best action is to pay debt off as quickly as possible. Then, a consumer should try to re-configure the home budget so that temporary credit is no longer needed.
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.
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.
People who seek free credit reports instantly online also seek ways to further monitor their credit. That is the main purpose of credit repair software.
It also helps you with a variety of other tasks. For instance, it helps you with the following:
Obtain your credit score: This can help you further monitor your credit history more successfully. This is one tool you can use to monitory your credit repair progress.
Analyze your situation: As you view credit repair software it can help you set up a repayment schedule. The goal in the end is to meet a debtor or creditor half way.
Faster retrieval of your credit report: When using the best credit repair software it is easy to obtain your report with a click of the button.
Easier financial planning: Budgeting and calculating is much easier done with the right credit repair software. You can use this to achieve your goal of financial freedom, and achieve your goals much faster.
Deal with credit cards: Some systems help you track all unsecured debt payments. This is another way to help you get rid of unpaid balances much faster.
Negotiating debt easier: As you use the credit repair software to negotiate debt, the process of negotiating debt usually goes smoother. This along with the help of the right credit or budget counselor can do wonders for you.
It is up to you to seek out the credit repair software that suits your needs. This is the best way to take advantage of all the ways possible to improve your financial situation.
It will help you start that new business you have always wanted to start, or to buy that home. It also just helps you have a clear conscience in order to obtain better interest rates. It also just helps you feel more empowered that you can change your life.
A credit bureau can either be your best friend or your worst enemy. They provide information to individuals and businesses as well as banks, landlords, employers, and other institutions.
This is a list of some of the reasons that a credit bureau exists:
- It helps monitor a person’s financial history. This is part of what determines a person’s creditworthiness. This is one of the first steps towards getting a loan-examination of a person’s credit report and credit bureaus hold this information.
- Another purpose of a credit bureau is to verify the existence of a credit or loan applicant. This helps store owners, banks, and even colleges and employers know that they are dealing with who they are dealing with.
- Credit bureaus help combat identity theft. Often alerts are placed on credit reports to help prevent further unauthorized action. Certain portions of a credit report may be blocked when this happens. In other words, one role of a credit bureau is to protect consumers.
- Organizations such as Equifax, TransUnion, or Experian are also around for another reason. These organizations prevent creditors from trusting in people who are not responsible with money.
- Another reason that credit bureaus exist is for recording-keeping. These organizations keep track of all your spending as well as all your major purchases and other inquiries. They also keep track of your financial obligations and how timely you make your payments.
- Another reason that organizations such as the ones mentioned in this article exist is to help repair your financial history. Being able to improve your credit history is one incentive to make better financial decisions.
Using your Credit Report
Often people seek a free credit report to help them come to terms with changes that need to be made. They also do it to make sure there is no activity that counts against them that has resulted from charges they did not authorize.
Online there was just recently a report about credit reports that I found very interesting. It explains false beliefs about credit reports of which most people are unaware.
This will help you determine whether or not you are making wise credit choices. This is how your future will be determined as you make an attempt to better your situation.
The Truth Revealed
One of the most obvious myths that people actually believe is the one of which they think they can instantly start with a clean slate once bills have been caught up. Paying your past debts is great for the conscience but it does not necessarily mean that it will wipe out your entire history.
You may still suffer some consequences for certain mistakes and/or unfortunate financial circumstances. This then probably leads to the next point, which has to deal with fear of debt management programs.
There is a wild myth out there that suggests that credit counseling affects a person’s credit score. However, if there are settlements made while the credit counselor negotiates with lenders and creditors that could affect you negatively.
This generally is the case whenever you have an account that is delinquent. However, if things are current it is not going to be counted against you if you are using credit counseling.
Another mistake in thinking that people often make is thinking that canceling credit cards always will boost the credit score. Although it is not wise to have too many of them that you cannot pay off, it helps to have at least two or three on your account.
Usually paying bills on time and not overextending yourself is more important than having a substantial credit card debt. However, you should still be careful about what actions you take.
For one, it will not look very good on your record if you for instance open up several credit cards during a holiday season. Too many inquiries at one time can really hurt your score.