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Credit Repair

When applying for a credit card or any other financial product, one of the first things a lender will ask is How is your credit? It is important to know and understand why your credit profile is so important to lenders. If the answer is I have less than perfect credit, there are still options available to you. The information in your credit history helps lenders decide how much credit and what interest rates you are eligible for. The better your credit history, the more likely the chances are that you will qualify for the best credit card rates.

The very first step in repairing your credit is to obtain a tri-merged credit report directly from one of the three credit reporting agencies. This credit report will include your credit scores. Since you are pulling your report directly from one of the reporting agencies, your credit score will not be negatively impacted. The 3 main credit reporting agencies are: Equifax, Experian, and Transunion. The credit scores contained within the credit report is used to determine your credit profile and risk to the lender. Bad credit is often any credit score less than 620.

What is a credit report?

A consumer credit report is a document that contains a factual records of an individual's credit payment history. Credit Card lenders are permitted by law to review your credit report objectively to determine whether to give you an approval. As people pay their bills, most lenders report credit payment information to credit bureaus. Bad credit results from any reported late payments, and any other derogatory reporting such a judgedements, bankruptcies, and foreclosures. Most of the information in your consumer credit report comes directly from the companies you do business with. Each mortgage lender has their own underwriting guidelines that they follow. In general, most credit card approvals are based heavily on your credit risk score.

What is a credit risk score?

Generally speaking, a credit score measures the likelihood you'll repay what you owe, and it is based on information in your credit report. A credit risk score is a statistical summary of the information contained in a consumer's credit report. The most well known type of credit risk score is the Fair, Isaac or FICO score. Sophisticated mathematical processes calculate the score by assigning numerical values to various pieces of information in the credit report. Credit bureaus provide risk scores to mortgage lenders to objectively evaluate an applicant's credit-worthiness. The three main credit bureaus that track and report credit include: Equifax, Experian, and Transunion. The score itself is relative and is viewed differently by various mortgage lenders and banks depending on numerous factors, including the creditor's risk levels, the lenders strategic goals, and mortgage underwriting guidelines. Your risk score will change over time as your credit history develops. Scores range from 375- 850. The higher the score the better the credit rating. Usually any credit score under 620 is considered bad credit.

Credit Reporting Agencies

Credit Reporting Agencies

Equifax Information Services
P.O. Box 740241
Atlanta, GA 30374-0241

955 American Lane
Schaumburg, IL 60173
847 517 5600

Trans Union Corporation
P.O. Box 390
Springfield, PA 19064-0390

How to improve your credit

Correct blatant mistakes.
Your credit score is only as good as what shows up in your credit report. Review your reports from all three credit bureaus for accuracy once a year as well as several months before applying for a loan. It is best to order this report directly through the credit reporting agencies. for example can provide you with a tri-merge credit report. If errors appear on your report generally you must obtain and submit to all three agencies a signed letter from the paricular creditor stating that this item is being reported in error and should be deleted.

Pay your bills on time.
This is always a good practice, and it's especially critical that you make prompt payments close to the time you need a loan. That's because a late or missed payment in the last few months are more likely to lower your score moreso than an isolated late payment five years ago.

Reduce your credit card or revolving debt balances.
A heavily weighted factor in your FICO score is how much money you owe on your credit cards relative to your total credit limit. As a general rule it is good to keep your balances at or below 25 percent of your credit limit.

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