CREDIT SCORES

When it comes to applying for a big loan or mortgage for a new home, the holy grail is almost always about having that perfect credit score. For most people, the significance of an excellent credit rating has been hammered into their minds by the time they have made their first dollar. So why is it, then, that your household income is not used to calculate your overall credit score when it still partially dictates the amount of credit you’re granted?

Having a high credit rating signifies that you are a reliable borrower who will pay back your loan in full and on time. So in order to make those payments, wouldn’t common sense suggest you would have to make enough money to cover what you owe? Wouldn’t someone making $100,000 a year asking for a $10,000 loan be more apt to repay it than someone who makes $30,000?

What happens to your credit score when you cancel a credit card? There are an awful lot of myths and misinformation surrounding this topic. Depending on who you talk to or what you read on the internet, canceling a credit card can be the best thing that could happen to your credit score, or the worst mistake you could possibly make.

You can obtain one free credit report online per year from the three major credit bureaus since 2005 and the passing of the federal Fair Credit Reporting Act (FCRA), which was designed to help consumers. To comply with this new law, the three major credit bureaus – Experian, Equifax and Transunion – pooled their resources to create a website that allows you to get your free credit report from all three agencies in one place: www.annualcreditreport.com. Remember that you only get one free annual credit report per year so if you need to have your credit checked later on, you’ll most likely have to pay for it.

Obtaining a Free Credit Report Online

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You know that your credit score, or FICO score, is a number that is used by lenders to evaluate your creditworthiness as a borrower. Your score is based on information from your credit report. If you want to buy a car, apply for a mortgage, or get a credit card, the lender will assess the likelihood of your default on a loan and whether you will make timely payments if they extend credit to you by examining this number.

This is a guest post by Mr Credit Cards from www.askmrcreditcard.com.

We all know that your credit score is used to determine if you get accepted for a credit card. Did you know that it has ramifications far beyond mere credit cards?

Maybe you are usually quite good at balancing the payments for your credit card with your paycheck, but the holidays created a big gap between your bill and available income. Now you’re fearful that there is too much debt in too many places for you to manage properly. A balance transfer credit card with a low introductory offer is just the tool you may need to help get your budget into shape.

Personal loans are a great tool for consumers to finance unexpected expenses like car repairs or large tax bills. However, your credit history isn’t great, but you need a personal loan and you’re afraid you’re going to get rejected when you apply for one. Years ago you made a poor business decision that resulted in having to declare bankruptcy, and although you have been working diligently to regain ground, you still have bad credit.

Although your bad credit is against you, don’t fret. There is a possibility of securing a personal loan even with a bad credit history. Many personal loans are offered on an unsecured basis. With unsecured loans borrowers do not need to offer collateral to secure the loan. In theory, lenders are providing the borrowers with money in good faith. Since these loans don’t always check the borrower’s full credit history, you may be able to secure a small amount. Unsecured loans charge higher than average interest rates since they are a bigger risk to the lender.

Ryan Guina is an entrepreneur and writer. He has worked for Fortune 500 companies and served six years in the USAF. He writes about money management and small business topics at Cash Money Life and military money topics at The Military Wallet. You can follow his twitter feed.

Your credit report includes very important documentation of your credit history, which is used by lenders to assess risk as well as employers and other agencies which have a vested interest in how well you manage your credit and finances. For this reason, it is imperative each consumer not only take the necessary steps to improve their credit management but also to remain abreast of the information reported to the credit bureaus.

The FICO(R) 8 Score, according to FICO, is becoming a popular choice for consumer credit risk assessment among banks and financial institutions. Being used by over 2,500 so far, this score is a way to determine the risk involved in taking on a customer.

A recent report from a major U.S. bankcard issuer says its use has helped it produce more profits because it has taken on fewer risky customers who are likely to default with car financing, credit cards and more. As a borrower, this means it’s good to learn more about the new FICO credit score to understand how it affects your personal credit score and opportunities for financing (Market Watch).

If someone has ever requested to pull your credit report, it’s likely that you were told that it would be a hard check or soft check, leaving you to wonder what the difference is between the two. There is a difference and it is something that should be understood before you allow someone to check your credit at all. To help you differentiate, let’s look more closely at what they are and how they can affect your credit report or credit score.

Hard Credit Check Versus Soft Credit Check