Raise Credit Score - Understand the System
If you are cleaning up your credit report then you understand the importance of your credit score. Your credit score can impact your lifestyle more than by how much money you make.
With a bad credit score you may be having employers turn you away from a job. You may be unable to purchase a home or get approval for an auto loan or a credit card. On occasions when you are approved it is at sickening interest rates.
If you know how the credit system works then you can use it to your advantage and increase your credit score. This will save you money that can be used for better purposes than paying high interest rates.
When the credit bureaus calculate your credit score they use an algorithm. They plug in your information including payment history, types of accounts, balances, ect., and then a computer calculates your credit score.
This three digit number is the yardstick by which employers, lenders, and others see your creditworthiness. In fact, most new credit transactions a lender never looks at anything other than your credit score. You are judged solely by this number.
Let us discuss how to use this system to your benefit. There are two things that carry more weight in the credit system algorithm than any others.
1. Erase negative listings. Negative listings are going to bring your score way down and need to be erased as soon as possible.
2. Have an unsecured line of credit in good standing. This is a simple step and everyone can do it.
The credit bureaus equation is kept secret and not released to the public. However after review of thousands of credit files it has been learned that having an open unsecured line of credit is just as important as removing negative items.
The unsecured line of credit will improve your credit score because:
1. A credit line adds a trail of positive payment history. The credit bureaus also like to see an account that is aged.
2. Improves your debt to credit ratio. The credit bureaus reward people who have high available credit and low outstanding debt.
This credit line will carry more weight if it is unsecured such as a car loan or credit card. However if you are unable to get approval, then you should consider a secured credit card or a secured loan.
The credit line will help tremendously but it is most important to delete negative credit from your report. If you can not get approved for an unsecured credit line try to remove the negative marks from your credit report and then reapply.
It is possible for everyone to achieve a 700 credit score for themselves. So start today and erase the derogatory marks and build positive marks on your credit report.
