Saturday, April 5, 2008

Credit Ratings and Credit Scores

instacards.gifIt’s a mysterious thing that we hear people talking about all the time. Credit ratings. For the uninitiated, it holds a mysterious quality and power over the kind of financial clout a person has. Credit ratings seem to affect what we can and can’t buy, what kinds of vehicles we drive, and even where we live in some mysterious way.? Credit ratings appear to be cloaked in a curious jargon the banks seem to hold over us. We’re sure they’re a powerful tool that can work for or against us but we’re not always sure of the ins and outs of how.?

?????????? There are actually two areas of the total package. One is called the credit rating and the other is called the credit score. The information used in both includes your social security number, your address, where you work and your bill payment history. It’s a composite picture of who you are and how you do business and its put together usually by three companies that vary depending on where you live. It’s important because any agency that might consider lending you money will have access to your credit rating or credit score and many of these agencies like banks actually provide information to keep these records accurate.

??So how do all those bad things like a bankruptcy affect your credit rating? Simple. A bankruptcy can hang around on these reports for up to ten years and a criminal record stays with you indefinitely. Even habitually missing payments stays on the reports for up to seven years.

?But because it’s called a credit rating, it stands to reason that the evaluation comes from somewhere, so there must be a credit score as well. The three credit bureaus in your area put together all the information on late payments, any collection actions as well as any outstanding debts. When they have all this information packaged, you get a score between 300 and 850. Obviously, the higher the number the more credit an institution loaning out the money will be happy to give you. There are certain cut off points as well. It seems that a person with a score at 619 or lower will have a hard time getting a credit card no matter where they live.

?There are several ways to monitor you credit rating or credit score and all the institutions that know about these things stress that you should make the proper inquiries at least once every six months. It’s also possible to pay a monitoring company who will let you know immediately if there are any noteworthy changes.?? In America the three major companies that deal with your information are Equifax, Experian, and Trans Union. Although you can contact them and get the necessary information in one of the more traditional methods, going online and paying a monthly fee will get the scores and rating quite a bit faster.? Keeping track of this information is also a good way to monitor for Identity Theft.

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