Most of us know that we have a credit report that is maintained by several major credit bureau and a very important part of your three bureau credit report is your FICO score. So what is your FICO score and how does it influence your borrowing decisions?

FICO is an acronym formed from the first letters of the Fair Isaac Corporation who worked out this system of credit scoring and is a number which is typically betwen 350 and 850 which ranks credit worthiness according to the proprietary algorithm devised by the company, with 350 being the poorest score and 850 being the best.

Though the precise details of the algorithms are a tightly held secret, over the decades many people have reverse engineered several of the important elements. For example, late payments will reduce your score and the greater the number of late payments you have and the later those payments are the more heavily your credit score will be reduced. The overall amount of debt which you carry each month is yet another factor. Another not quite so important factor is the number of credit cards you have and the number of credit checks carried out out on your account.

Any score of less than approximately 620 is considered marginal and a FICO score of below 580 is poor. A FICO score of 720 or more is considered to be very good to excellent. A FICO score which falls between 620 and 720 represents something of a gray area in which factors other than simply your FICO score will play an important role in any loan decisions.

Banks, mortgage companies, credit card issuers and other lenders will use your FICO score as an extremely important factor in deciding whether or not to make a loan. Lenders will also take your FICO score into consideration when deciding what interest rate to charge you. Other things being equal the higher your score the lower the interest rate you will have to pay.

Often of course everything thing else is not equal and general interest rates, the present demand for loans, the overall economy and a host of other factors will have a substantial influence on whether or not lenders will lend and at what rate they will lend.

Yet another extremely important factor in the equation now is the use of computers which has changed the financial industry significantly over the past 20 years and given consumers far more direct access to products an services using the Internet.

Despite all these changes your FICO score remains a primary tool for the majority of lenders and, while it might not determine the final decision, it unquestionably influences the ‘first cut’ when presented with a pile of loan applications either approve or disapprove.

Luckily for those who have financially slipped there are choices and even if your FICO score is not very high you nevertheless have several options. The first thing you need to do however is to get some free debt information and set get yourself a plan to improve your credit score.

As you gradually remove your outstanding overdue debts by paying them off or by negotiating with your lender your credit score will gradually rise. And remember that the age of those 30 and 60 day past due and late payments is a factor in working out your credit score.

While you are improving your score you can also shop around for lenders prepared to take a higher risk by lending you money. The problem of course is these loans nearly always carry an increased rate of interest. If possible your best approach is to see if you can go without borrowing for as long as possible while you work to increase your FICO score.

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Your credit information may be of no use to you. If you’re not planning on buying a house or renting an apartment, buying a car, taking out a loan, paying for college or getting a new credit card, then you won’t need to worry about getting your free credit score. However,you need to find a free credit reporting company to get a listing of all late payments, charge-offs, debts, collections, loans, liens and types of credit accounts open, so they can get an honest appraisal of their borrowing power. Credit report services from Equifax, Experian and TransUnion each will offer you a free report once a year to help you see where you are and where you need to be financially.

Bad Credit

To improve your credit information, you’ll need to obviously pay off all existing debts, but this is easier said than done, isn’t it? Some people like to go through a credit counselor or debt relief agency, while others do it on their own through responsible planning. After looking at the credit report services files, you can write down all the balances and interest rates you need to keep track of. Write down your monthly income after taxes and deduct your rent or mortgage payment, as well as other monthly expenses like utilities, insurance, loan payments and groceries. Then you’ll know how much you have remaining to pay off your debts. Consider ways to reduce your spending, such as car-pooling to work, eating out less often or turning off your cable for a little while. Also, brainstorm whether you can make supplemental income somehow. To develop a good plan, pay off your minimum monthly debt payments first and then use the remaining to pay off the highest interest rate and highest balance. Soon you’ll be on your way toward improving credit scores.

Credit Help

To file a dispute about your credit information, you can compose a dispute letter to each of the three major credit bureaus, which are Equifax, Experian and TransUnion. On the letter, include the date, your name, address, phone number and social security number. Just write “The following data is incorrect and should be updated,” then list each inaccuracy, explaining why it’s wrong and what it should be updated with. Attach a marked copy of your credit score report and include any communication, account records or statements that can help verify your version of the truth. Mail is the best way to dispute with Equifax and TransUnion, while Experian only allows online disputes. The credit bureaus have 30 days to investigate and repair your credit info. Once it’s done, they will send you correspondence including what was or was not changed. If you’re not satisfied with the results, then you can try to resubmit with different documentation or go directly to the creditor to resolve.

There’s no tool greater than credit information. If you’ve suffered poor credit scores in the past, then you can still rebound from a foreclosure or collection account by paying regular bills in full and on-time. The best way to stay ahead is to bring in more income, see where your spending problems lie and save sufficiently. “What works” in this department varies for each person. Some need to put the money out of sight, out of mind, while others can manage it in their checking account. Whether it was a one-time “oops” or a pattern of “I didn’t know,” seeking credit info is the first step toward financial recovery.

Credit Repair

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One of the most important things in one’s life is their credit rating. Many don’t think about this as much as they should, or they think that what they do won’t have much affect on their future. Though there are many ways that can help improve the credit rating once it is down, it is much easier to keep it in good standing rather than trying to build it back up. This rating is important for any type of purchase that requires credit, and is beginning to have a say in whether someone gets a job or not.

Young people on their own for the first time might have problems understanding what their credit rating report is and what it means to their future. This is something that all parents should discuss with their children so that they don’t make mistakes with their money. It is not easy to keep to good credit rating when the person is young and has no experience. A kid who is exposed to education and tutored about the importance of good credit rating will fare better when faced with financial decisions that might hurt them.

Fixing a bad credit rating later in life is not always as easy as it might seem. It does depend on the amount and the type of problem that is listed as bad debt. An example of good debt which look attractive can be a mortgage that is always paid up on time such as car loan. When loans are defaulted or not paid on time, your credit rating is damaged and it is tough to repair your credit worthiness without paying them off immediately. Even then, the bad mark might not go away very quickly even if it does say that it has been paid in full.

More and more employers are checking potential employee credit reports to decide if they want to hire someone. Companies that deal with a lot of money might not want to hire someone who has bad credit and owes a lot of money. They may fear they will steal from the company. Other companies might look at a credit rating to see if the person has a chaotic history or not. They think what is on a credit report will reflect how a person will be as en employee. If they see a history of debts, they may feel that they will not be the best choice for an organized and motivated employee.

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You have a very busy life. You need to keep track of so many things. Picking up your kids from school, going grocery shopping, paying your bills on time, getting enough exercise, are just a few examples of the complexities of life. How then are you supposed to do all that AND stay up-to-date with every aspect of your finances?

MyFico Score Watch helps you do just that by giving you one central and automated place to keep track of you FICO scores and your credit reports.
Score Watch Benefits:

• Score Watch automatically keeps track of your credit report on a daily basis and your FICO score weekly.
• Has the ability to alert you via email or even SMS when there is an unexpected change to your credit that would negatively affect your FICO score.
• Just set up a goal FICO score and MyFico Score Watch will send you and alert as soon as you’ve reached it. It will also alert you when you qualify for better interest rates
• Your membership with MyFico Score Watch® entitles you to two credit reports from Equifax yearly that you can review and save for future reference or to dispute incorrect data.

Why is it so important to keep track of your FICO Score?

Your FICO Score is how money lending agency like mortgage bankers and credit card companies rate you. Your FICO score is made up of a lot of different statistics and the score plays a major part on the interest rates you can qualify for. If your score raises you should be entitles to a better rate and if your score drops you many get penalized.

How is your FICO Score Calculated?

There are many different things your FICO score is made up of and that My Fico Score Watch® monitors but a few of the most influential ones are:

• Payment history for any previous debt
• Amounts owed on current loans and credit cards
• Length of credit history
• New credit received
• Types of Credit Used

With all these factors it’s clear that you need help keeping up with all this information. Wouldn’t it be nice if you could just put all this reporting and tracking on autopilot? Well now you can with MyFico Score Watch®!

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The recent rise in consumer debt has many people in this country struggling to get credit of any type, however, improving your credit score is doable. Because you need to borrow money to rebuild your credit rating but cannot do so lends itself to the expression a ‘catch 22 situation’. There are ways to get a loan or credit card but invariably these cost the consumer more because of their situation.

If you decide to give this a try, then you should bear in mind that prior investigation should be done first, such as going over the annual percentage rate, analyzing it together with other fees and whether security is required to be able to check and realize how much it would take you to repay the loan. Checking is usually just a matter of logging onto a consumer comparison site which will show the rates and terms for companies supplying poor credit loans. What most consumers do not realize is the more often you apply for a loan (over a short period of time), the more of a detrimental effect it has on your credit score so internet sites like this can be of enormous help. Being decisive in this case is greatly recommended because if you tend to frequently change your mind upon choosing the company to make applications for a loan then you will just end up putting yourself into a more complicated situation or even worst.

One of the best ways to rebuild a poor credit rating is the use of a credit card as transactions and payments are reported frequently to agencies that monitor your status, this will help raise credit score. As with any other type of bad credit lending, there will be some form of ‘loading’ from the issuer but it is easy enough to discover who is offering the best deal at any one time. Some credit cards have a high income level for applicants so be careful before you apply for a credit card which requires a higher income than you receive as it will be wasted and will go against your credit score. Normally, once you have used your credit card in a responsible manner for a while, the finance company will raise your credit limit but you should refuse this as it could just put further temptation in your way.

Some people try for a home improvement loan but may not qualify even though the remodeling work may be urgent so in this instance it is worth trying a bad credit mortgage lender that may be able to help. The interest rate is not the only aspect of a mortgage loan you should consider though as there are other factors that could influence just how much you eventually pay. Having a low credit score can just give you tons of worries and troubles to deal with, however, it is not yet the end of the world for you as you may still be able to get credit in the form of a loan or credit card and even an auto loan. A professional debt counselor is able to provide advice and comprehensive information regarding debt management. This is especially true for people who are in serious debt and having trouble
paying the bills every month and getting a debt consolidation loan as an option is their
probable suggestion. So,for you to effectively find your way towards repairing your credit you should seek them.

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You can repair your credit information if you have the know-how and the tenacity. Often, it involves calling your lenders, creditors and collection agencies to barter and negotiate with them. You may have to send them a letter or hassle them every single month until an item is removed, but you can often get lesser items off your report. Things like charge-offs, collections accounts, settlements and late payments can all be negotiated. Sometimes, people hire a credit counselor or debt relief company to manage these negotiations for them. If you have a bankruptcy, foreclosure, lien or judgment against you, then this negative credit information will be on your account for 7-10 years without much you can do. But for the rest, you may want to micromanage a little to see what you can get.

Once you have your credit information, you should focus on improving credit scores. Check out your free credit score reports from Equifax, TransUnion and Experian. Credit reporting is voluntary, so the files may all be slightly different. Once you have this credit info, examine your reports for errors. Roughly one-third of credit reports contain serious errors because the credit bureau doesn’t verify the information your creditors send to them. Therefore, keeping clear credit is your responsibility. Some of the items may come off through a dispute, where you send a letter or a photocopy of your credit report with circles around the mistakes and supporting documents to validate your dispute. As for the legitimate blemishes, they’ll be on your credit for up to seven years and will likely only be fixed through consistent on-time bill payment. You can phase out the use of unneeded credit card accounts but do not close them. Simply stop using them and pay then off. Lastly, a secured credit card can help you re-establish regular on-time payment history again.

To file a dispute about your credit information, you can write a dispute letter to each of the three of the credit bureaus, which are Equifax, Experian and TransUnion. In your letter, include the date, your name, address, phone number and social security number. All you have to put is hat the data is wrong and can they update it and then list the wrong info and explain why its wrong. Attach a marked copy of your credit score report and include all previous communication, account records or statements that can help prove your version of the truth. Mail is the best way to dispute with Equifax and TransUnion, but Experian only allows online disputes. The credit bureaus then have 30 days to check and repair your credit information. Once it’s finished, they will write you a letter including what was or was not updated. If you’re not satisfied with the contents of the letter, then you can try again with different documents or go directly to the creditor to resolve.

Sometimes, having a look at your credit information is the best way to bring to light an identity theft if you are don’t use one of the identity theft products such as Life Lock who monitor your credit information for you and watch for any weird activity. If you find something in your credit information that you have positively no explanation for, a new credit card, a new laptop on credit etc. get in touch with the 3 credit agencies as soon as possible and police for information on your next steps. Without any type of protection, monitoring your credit information is perhaps the only way to avoid identity theft running amok. It won’t prevent it from occurring it but at least it stops from getting any worse.

Looking at your credit information can be daunting at first if you’ve had a back track record. The worst thing you can do is put everything off and wait for it to go away. If the creditors are really hounding you and you’re not sure how you’ll have the money to cover it all, then your best bet is going through a credit counselor or debt relief agency. If you have one or two bills that are behind or have paid most of your debts off and are just looking to start anew, then you can handle this. The last 24 months constitute 60% of your credit score, so you can turn things around this year simply by paying your bills regularly, in full and on-time.

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