Why You Should Increase Your Credit Score
Published June 22, 2010 | 
A good credit score is the key to a lot of opportunities these days. A score can open up the door to a lot of opportunities and conversely, can shut the door of opportunities, depending on the credit ratings. An individual with a good credit score gets a preference over an individual with a lower credit score in loan applications for just about any product and is also favorably considered for a job application. In other words, high score is viewed as an indicator of the financial credibility and integrity of an individual.
Let us take a look at the reasons why you need to increase it.
First, if you increase your credit score, your loan applications will be favorably considered by the banks and other financial institutions. Credit scores are checked for loan applications for just about any product (for example, home, car, and consumer). The credit rating agencies and the Fair Isaac Corporation (FICO) rate your credit worthiness and their ratings form the basis of the decisions by the banks on loan applications.
Additionally, you might also be eligible for other benefits like lower interest rates and friendly offers for additional loan products. These benefits are however, extended at the sole discretion of the banks.
Second, credit scores these days are being considered as one of the qualifying criteria for awarding a job to an individual. Obviously, the higher your score the better are the chances of an individual to secure a job and vice versa.
Linking the chances of getting a job to the credit scores has been criticized from many quarters as many think that this is unfair and credit ratings of an individual has no relation with the qualifications and skills for a job. However, the truth for the time being is that the employers do consider credit rating as a criterion for candidate screening. This is the reason you need to increase your score.
The paramount importance that is accorded to credit rating in determining an individual’s financial credibility and integrity naturally has not been universally accepted. Many people hold that the entire system is faulty. According to these people, while the past can be an indicator of an individual’s financial credibility, it cannot really form the sole basis of a judgment for the future.
For example, an individual with a low score but with an improved financial position applies for a loan and is denied the loan. In such cases, what is important is to not only take into account the past, but also the circumstances that led to a low credit score. What are also important are the individual’s current financial position and the current credit worthiness and loan repayment capability.
Ten Greatest Myths About Your Credit
Published June 22, 2010 | By: Alison Feliciano
Submitted: 03:40PM on Thursday 17 June 2010
Credit Agencies are empowered with some kind of governmental authority.
Credit agencies have no legal authority at all, they are simply private companies who are in the business of selling credit information.
• The credit agencies are required by law to keep derogatory items on your credit report for 7 to 10 years.
There is no law that the credit agencies report anything on you at all. Just the opposite is true! Credit Agencies are required by law to automatically remove all derogatory items older than 7 years or in the case of a bankruptcy, 10 years.
• It is impossible to get a bankruptcy off.
Bankruptcies come off just like any other derogatory that is incorrectly reported, obsolete, erroneous, misleading, incomplete, or that cannot be verified. Remember, the nature of the item has nothing to do with its removal under the Fair Credit Reporting Act.
• The information on your credit report cannot be changed.
The opposite is true under the Fair Credit Reporting Act; both the federal and various state laws REQUIRE that items be removed if they are not 100% accurate or cannot be verified in a timely manner.
• It is illegal or immoral to have the information on your credit report altered or removed.
Not only is it not illegal or immoral, but it is what the Fair Credit Reporting Act is all about. It was enacted by congress for the very purpose of protecting consumers from the intrusion of the credit agencies into our lives.
• Paying a past due debt removes it from your credit report.
Just because you pay an old debt does not change or erase the fact that at one time you were not paying on it as you agreed. Can this record be changed? Absolutely!
• Inquiries are not derogatory and will not affect your credit standing.
Anything that erodes your financial credibility is damaging to your credit standing. In the case of inquiries, one or two is not too bad, but any more than that and they begin to tell a story of their own. Any prospective credit grantor will look at your credit report and think that you are desperate for credit.
• If you get a derogatory item removed, it will just come back.
Not if it is removed legally. When it is removed with cause under the Fair Credit reporting Act it cannot legally be placed back on your credit report. The same law that required its removal prohibits it from being placed back on.
• The past equals the future.
This is the biggest myth of all. The concept that once bad, always bad, or at least for 7 years is totally false. Anybody can run into hard times or an emergency situation now and then, but that doesn’t automatically mean that they are a poor credit risk for a magical 7 years. The simple truth is, no credit report can predict the future.
• I cannot restore my credit.
Yes, you can! You can try to do it yourself (just like you can be your own attorney in a court of law). OR, you can allow licensed professionals to educate you and assist you in restoring your credit profile
Understanding Credit Scores and Reports
Published June 18, 2010 | The first step towards homeownership is to get a copy of not only your credit score, but also your entire credit report. A credit score is a number from around 350 to 850, with higher scores being considered better. Any score less than 600 will put you in a hard place to qualify for a loan. What can make your score low? If you have defaulted on loans, made late payments, or filed for bankruptcy, these issues will have been reported to the credit agencies and will subsequently lower your score. A lower score means you are more of a liability to a lender.
A credit report, as opposed to the score, lists out all of your open and previously open accounts. It shows balances left on loans, default or late payments, high balances, and the like.
You can access both a report and a score at the government sponsored site, annualcreditreport.com. The government allows for you to access your report for free three times a year, from one each of the major credit reporting agencies: Equifax, TransUnion, and Experian. You typically must pay a credit agency about $15 to see your actual score.
One of the main reasons to check your report three times a year is to make sure it is accurate. Identity theft is rampant these days, and you want to make sure that accounts opened in your name are actually accounts that you opened.
If you feel that you are victim of identity theft, you can request that a “fraud alert” be placed on your report. According to annualcreditreport.com, “A fraud alert can make it more difficult for someone to get credit in your name because it tells creditors to follow certain procedures to protect you. It also may delay your ability to obtain credit. You may place a fraud alert in your file by calling just one of the three nationwide consumer credit reporting companies.” Many banks also now offer programs of added protection for under $20 a month that monitor your report for any changes, such as new accounts (e.g. Credit cards) being opened in your name.