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Your ability to qualify for any kind of financing – from credit cards to auto loans to mortgages, depends greatly on credit scoring. Most creditors will draw your credit report to look at your FICO score.

The FICO score will be used to evaluate your qualification for a particular credit line or loan program and to calculate the applicable interest rate. Depending on their specific institutional needs, some lenders may use the highest FICO score or the middle score, or only one FICO credit score if the credit transaction is for a consumer purchase.

For instance, if you were to apply for a house credit card at a department store, they would run your credit profile (with your permission, of course) to obtain a FICO score. On the assumption that the store reports to only one of the three credit bureaus – as most department stores tend to do -, then the inquiry will go only to that bureau. The store would make its decision based on only one bureau’s information, and by using only the one FICO score.

The system works differently for mortgage credit. Banks report to all three credit bureaus (Experian, Equifax and Trans Union), so they would get three different FICO scores, calculated on three credit reports that the credit bureaus sent for scoring by FICO. Since there are three FICO scores, banks generally will use the middle or average FICO score. Depending on the type of financing you are seeking, whether it is for a new car, appliances, a credit card, or a home mortgage, your FICO score makes up a significant portion of the decision-making process. The FICO score will determine the premium rates you pay for insurance and the interest rate available to you on a loan.

Your FICO score is usually a composite of the following: Read more of this >>

By now everyone is aware of the Vantage credit scoring system developed by the three major credit bureaus Equifax, Experian and TransUnion that grades consumers on a grading scale of A-F. I have done extensive research but have yet to find out how lenders will use this score or what lenders will choose to use the Vantage score as opposed to the FICO score. Will they be flexible in their analysis and look at the actual score or just look at the grade of A-F.? Unfortunately, no one knows for sure. For now, when applying for a loan ask the lender which credit score they are using.
I recently refinanced my home and the lender used the FICO score. Well, I recently obtained a copy of my credit report and credit scores from the three major credit bureaus, Equifax, Experian and TransUnion. I have not made any late payments in the past 10 years; therefore I expected to get the highest credit score possible or at least very close to it. My scores were 760 and above. When I ordered by Experian credit score I wanted to order a FICO score yet I only had the option of getting a Vantage score. My Experian Vantage score was 819. To my surprise all of these ridiculous reasons were given why my credit scores were not higher:

1. Your report does not show real estate loans – this was incorrect, I have had a mortgage for the past 7 years.
2. Your report shows that available credit across your open revolving accounts is too low – I only have one credit card with a limit of $3,000. They are telling me that if I had more credit cards my score would be higher. Read more of this >>

You’re ready to buy a new car.

You’ve done all your homework.

You know your three FICO credit scores.

You determine that your highest FICO credit score is from Equifax (also known as your BEACON score).

So, you find a car dealer who uses your highest score (which increases your opportunity to get approved at a good rate).

You get to the dealership and ignore all the salespeople by going directly to the finance director’s office.

But as the finance director reviews your credit file in front of you…you can’t help but think something is wrong.

Sure enough…the dealer says your Equifax/BEACON score isn’t high enough for their lowest interest rate.

How can this be? You just checked your FICO credit scores through www.myfico.com/12 a few hours ago. It’s possible—although unlikely—the information on your credit report has changed and that your scores have decreased since you last checked them. Remember, your credit scores are dynamic and will change whenever information on your credit reports changes. Read more of this >>

Perhaps it’s happened to you – a period of mounting medical bills, loss of wages, natural disaster and even identity theft. Any one of these things can cause a person’s credit score to plummet. Today, more than ever before, a decent credit score can be a positive force in every aspect of your life.

We all want to have enough money to pay our bills and have enough money left over to live. To accomplish this, we’re expected to manage our money and our credit wisely. Our credit score is a picture of how well we handle our debts. What are the typical purchases and decisions that are affected by a person’s credit score?

• Applying for a job
• Buying a car
• Purchasing a home
• Renting an apartment
• Applying for insurance
• Requesting a credit card
• Opening a bank account

This is only a short list of products and actions that involve a credit score. So, what is this mystery called Credit Scoring? It all starts with your “credit report”.

The three national credit reporting agencies are Equifax, Experian and TransUnion (with smaller ones including ChexSystems). Read more of this >>

As unbelievable as it may sound, most consumers are not aware of what their credit score is. For as valuable a piece of information as that is, it is almost unthinkable for one not to know what their credit score is, or at least approximately what it is. You see, your credit score is used for much more than just deciding whether you should be approved for a new line of credit. It is also used today by many employers who are checking out a potential new employee, and also by some employers as part of the employee’s annual review to ensure that the employee is not digging himself into a financial hole outside of work hours. Your credit score is also starting to be used by car insurance companies to determine what rates you should pay, where their studies allegedly confirm that people with lower credit scores file more claims and for more frivolous items.

Sometimes a credit score is also referred to as a FICO score. The term FICO comes from the Fair Isaac Company and is the method that is preferred and used by most credit bureaus to calculate a credit score.

Credit scores range from a low of around 350 (very bad credit) to a high of around 850 (excellent credit). An average score is between 650 and 700, which is where most consumers would not have big problems in getting approved for a new account. But if your score falls below the 600 range, you are going to have difficulty in being approved, at least at prime lending rates, for a loan, credit card, or new line of credit because potential lenders will view you as being a higher risk.

One thing you should note is that you should check your credit report at least once a year from each of the three major credit bureaus. It should come as no surprise to learn that the majority of consumer and business credit reports contain errors and mistakes, Read more of this >>

One of the biggest advantages of online credit reports is the convenience of being able to look at it on your own computer in the comfort of your own home. It can be done in minutes and is obtained through a third party, such as through Equifax, Experian, or TransUnion or through a reporting agencies’ own website. It is easy to do, you simply enter your personal information and answer any questions they may ask about your past and the credit report is yours!

You will need to pay for reports from the three, third party companies and you will need a report from each for a complete credit history. These may cost about $9 per report. However, this is a small price to pay for the comfort of knowing that your finances are in order and that no one is attempting to use your personal details to open credit accounts. These reports may be sent by mail or can be obtained online. It is worth looking at these credit-monitoring companies websites since they may have trial offers where they offer you a free credit report. This would allow you to obtain your report and you can cancel your account with them before you need to make any payments.

You will also receive your FICO score with the report, along with some advice on how you can improve this score. FICO is named from Fair Isaac Corp., which is the company that invented the score. It is a three-digit number that encompasses your entire financial history. Read more of this >>

A person’s credit score, often referred to as their “FICO” score, is an important tool that lenders use to help determine the creditworthiness of a potential borrower. If you want to make a large purchase, such as a house, for which you will need financing, you want your score to be as high as possible. To understand how to improve your overall credit rating, it is imperative you understand what factors influence your FICO score.

Payment History

Do you pay your bills on time? Most creditors, lenders, and service providers will charge a fee if you do not. Obviously, the biggest thing wrong with that is the egregious waste of money. What is worse in the long term is that after 30 days of nonpayment, the lender will likely report you to one of the major credit bureaus. (In the U.S., there are three such credit bureaus: Experian, Equifax, and TransUnion.) Considering that thirty-five percent of your credit score is based on payment history, it becomes clear how important it is to keep up with your financial obligations. No other single factor has that much influence on your FICO score.

Debt to Total Credit

The ratio of your outstanding debt to the total of your credit lines and loan amounts counts for thirty percent of your credit score. For example, if you have a credit card with a limit of $5000, and you owe $4000, your debt to total credit ratio is eighty percent. After paying down $3000 of the principle, your outstanding balance is $1000, giving you a ratio of twenty percent, which is much better. Read more of this >>

Credit is a double-edged sword. It allows you the freedom to purchase items that are otherwise unavailable to the cash-only consumer, such as hotels, travel, online transactions, and rental cars. The sharp edge of this sword is obviously your obligation to repay the debt. Used carelessly, overwhelming credit card debt can ruin your FICO score, and put an incredible strain on your goals to achieve financial independence. Remember, responsible people don’t create debt with the intention of never paying for it. Use credit wisely, and remember that shoppers with credit cards handy spend an average of 34% more while in stores than those who do not charge their purchases.

Credit card horror stories are everywhere, and there is a good chance you know somebody who has experienced something similar to this:

A young college student received a credit card offer in the mail. As a full-time student, he did not have a steady income and wondered how he managed to qualify. His credit rating was based entirely upon his potential to earn income as a future college graduate, and the complete lack of negative information in his file.

The student carried his freshly minted card in his pocket for several weeks, resolved to never use it, except for an emergency. Near the end of the semester he and a few classmates were pulling an all-night group study session in preparation for final exams. Around midnight somebody suggested they call out for pizza. They pooled around twelve dollars in cash between them and nearly gave up in frustration when our hapless credit worthy student volunteered his credit card. It was a small beginning, as these things typically are, but credit use is like an addictive drug. It is so easy to use, and the pain of repayment is always somewhere down the road—too far away to be associated with the enjoyment of pizza tonight. Read more of this >>

The problem: American consumers have an estimated $2 trillion credit card debt collectively, and the total debt seems to be going higher. Personal bankruptcies are on the rise. It’s been estimated that 8 out of 10 of these same consumers have never received any sort of meaningful, practical education in personal finance.

But you’re different. You’ve worked hard to improve your credit score by making sure you’ve paid all major credit cards on time every month without fail. But consider this: could a late payment to the local video store rental club unravel all you’ve achieved?

A record number of credit card companies have built “universal default” clauses into their agreements, which allow them to raise your interest rate if you’re late making a payment — even to someone else!

Is there such a danger lurking in the fine print of your credit card contract (blithly referred to as “the agreement” by the companies)? Is there a nasty surprise waiting inside your next monthly credit card statement?

Lately, news reports of more and more people becoming aware of the so-called “universal default” clause buried in the fine print in their credit card agreements; becoming aware not because they were curious about this heavy-handed new trend, but because they have been personally affected by the clause — a clause that sometimes spikes the monthly revolving interest rate up as high as 30%!

How could this happen, you say? Well, some credit card companies — apparently on a new search to implement new fees to increase corporate profits — have introduced this onerous high-interest penalty on their customers. Read more of this >>

Finding a loan that’s right for you isn’t always easy, especially if you don’t go about it the right way. These 4 steps should help you find your way through this often stressful time and make your life a little bit easier at loan time. Completing each step will get you closer to finding the perfect loan with the right price.

STEP 1 OBTAINING YOUR CREDIT REPORT

The 1st thing you want to do is run your credit (if you haven’t done so already). For those of us who have had credit issues this can seem like the hardest part, the part you wanted to avoid but the truth is avoiding it will only make it worse. This is the most important step so PLEASE do yourself a favor and don’t skip it! After all you do want that new house, don’t you? I thought so!

This step is the most important because your credit has a great impact on the terms and percentage of your loan~ NO MATTER WHAT. Of course that does not mean you can’t get a loan if you have bad credit. There are many bad credit loans available today and we say thank goodness to that but we have yet to find a bad credit loan with a great low monthly payment and percentage rate. Unfortunately, that’s just the way it is but at least you can get a loan, years ago you would not have been able to do so with bad credit. So in order to reduce your monthly payment and % on a bad credit loan (or any other loan) you must know what is on your credit report to be able to fix it, the point is not necessarily to get your credit to a perfect standing, that takes a long time, what your trying to do is improve it as much as possible before your home purchase so that you can find a loan or bad credit loan that will work for you without it being a financial nightmare.

Also, by managing what is on your credit report you can improve your credit score a.k.a your Fico Score. This Number is the key element in determining the loans you will be eligible for and the terms within the loan. Higher FICO Scores = Lower Monthly Payments. If you have been only human (like most) and have made a few financial mistakes your credit report and Fico Score Read more of this >>