If you are considering a loan, you may want to know what a lender is looking for in your credit history. Basically, a lender would be looking out for three things in your credit background;

1.    Likely borrowed money for the down payment

2.    Your ability to pay back the loan

3.    The possibility of additional creditors somewhere who are not featured in your credit report.

What Happens After Bankruptcy?

In 2001, a good number of people in America sought solace in personal bankruptcies as a way of getting a financial fresh start. Fortunately, personal bankruptcies declined steadily two years after. However, there seems to be a significant rise in bankruptcy cases, over 1million cases. No doubts, you may get a fresh financial start by filing bankruptcy, especially when it is the only way out. However, bankruptcy does not proffer an immediate clean slate.

Once you have a bankruptcy record, rebuilding a credit history that would attract desirable lending rates may take up to 5 years. Pending when your credit history becomes clean, you may obtain credit but at ridiculously high rates, including exorbitant fees on credit items such as cards.

Apartment Hunting – Request Denied?

Your case may be like Jennifer’s, a divorcee aged 35. Jennifer lives in New York with her husband. Then, comes a divorce, one of those sulking things prevalent in America. Well, Jennifer has no option but to look for another apartment where she and her two little girls can stay.

She proceeded with apartment hunting. She found a habitable apartment eventually and was given a form to fill after inquiries. Unfortunately, her rent request was denied. She was confused and demanded to know the reason for the denial. The agent in charge of the building points out that her credit is not clean, and that she’s ineligible to rent as a result. Jennifer couldn’t place what the problem was since she has not defaulted in her Visa and car payments.

So, what could she do at the moment? Jennifer decided to contact the credit bureau…guess what? There’s an alarming revelation in her credit report… Keep a date with our next post to find out what happened and how Jennifer was able to resolve the issue. Of course, she finally got an apartment, good news, isn’t it?  But, she had to fix her credit record first.

Several factors in your credit record are weighed while trying to determine your credit score. Such factors include balances, payment history, the number of credit accounts in your possession and their types. Using a formula, more objective results are derived, compared to using different factors to arrive at a standard for credit scoring. But, formula also has its limitations – e.g, you will be scored low if you have no credit history due to regular cash purchases.

What Credit Score is Considered Good?

Credit score range is between 350 and 850; the higher the score, the better. On the other hand, lower credit score increases credit risk. Good credit score is relative. Industry-wise, there’s really no available standard for determining what constitutes good credit score. Creditors and lenders would usually consider critical factors in determining low risk or no-risk credit score. Normally, majority of creditors would consider a score in 700s (or more) as low risk or risk-free score.

Sometimes also, scores around the 600s are considered good credit scores by some creditors. However, it is good to work your credit score up to the 700s or even more. This would make you a good candidate for credits.

Am I responsible for not Having a Credit Score ?

If you do not have sufficient credit info, the credit scoring models are not able to generate a credit score for you. Little or no credit history will deny you a credit score. Apply for a secured credit card to start creating your credit history.

How Do Credit Cards Affect my Credit Score?

The aspect of credit cards that affect an individual’s credit score is the balance owed on each card. If you carry large amounts of credit available,  or high balances on your credit cards, your credit score will suffer. However, it all depends on your overall credit history. You can carry several credit cards and still keep an optimum credit score, the secret lies in carrying modest balance and making timely payments.

Is my Credit Score Affected by Late Payments?

Sure, the single critical factor that affects credit score severely is late payment. Regardless of the duration, late bill payment sends a red signal of your inability to pay debt in the future. Therefore, lenders frown severely at late payments. Don’t forget that late payments linger on an individual’s credit report as long as 7 years.

We will be back with more insightful credit score FAQs and Answers from Experts.

Tip 1

Redeem Whatever You Can; if you still have good standing accounts, do not sacrifice them for the dented accounts. Don’t quit making timely payments on all the accounts you have currently.

Tip 2

Be Tactful about Closing Credit Cards; it is rarely helpful to the credit score when credit cards are closed. Instead, your credit score could be severely impacted as a result of closing credit cards, particularly when the account has balance.

Tip 3

Address One Credit Dispute at a Time; if your credit report has several disputable items, do not use one dispute letter to address the entire issues. Do your best to spread your credit disputes, use one letter for one dispute and avoid addressing all the disputes within the same time frame.

Tip 4

Desist from Practices that Hurt Your Credit Score; when you get a copy of your credit report, take your time to examine the practices that leave negative effects on your score. Subsequently, make up your mind to desist from such practices and turn a new leaf. Practices such as late/missed payments are detrimental to your credit score, so try and make timely payments and do not miss any payment.

Tip 4

You may Need to Seek Consumer Credit Counseling; this is also an essential credit repair tip. It is especially needful when you have overwhelming credit issues. For instance, if your debts are huge, it is likely your creditors may not want to work with you directly. It is even worse when you are unable to come with a satisfactory payment plan. At such time, seeking help from a reliable consumer credit counseling agency will help you obtain favorable terms from your creditors.

Tip 5

Do Not Consider Bankruptcy Except it is Inevitable; bankruptcy leaves no one with desirable effect. The consequences of bankruptcy would usually linger for 10 years on your credit history. However, if you have come to your wits-end and do not have any other option for debt relief, you can go ahead and file bankruptcy. Before you conclude that bankruptcy is good for you, get help from a consumer credit counselor, allow an expert’s advice to influence your decision.

Credit repair is not an uphill task, it is also not an over-night job. Consistency in your efforts plus discipline in the area of finance management can reward you with excellent credit repair outcome.

If your credit score is going down, the following circumstances could be responsible:

Late Payment

Late payment can have so much negative influence on your credit score. When lenders scrutinize your credit report, they are more concerned about your being 30, 60 or more than 90 days delinquent on a payment. So, if you are way backward in making your payments, it would surely tell on your score. Therefore, if you have past history of late payments, it would be helpful to leverage automatic bill paying services that several banks provide.

Having Only New Accounts

You may not be aware, but 15 percent of your credit score is determined by your credit history duration. So, if the accounts you have to your name are all new accounts, your credit score is likely to be affected. One of the things you should desist from is closing your old accounts frequently.  Thus, leaving a dormant credit card account open would help project your credit history as being long standing.

Bankruptcy Filing

In critical financial cases, bankruptcy could be the only option to get a fresh stat. However, bankruptcy filing would lower your credit score significantly. Bankruptcy filing will not only impact your credit score, it will also linger on your credit report for a decade. Typically, your credit score can sink down by 220 points or slightly less. So, do everything possible to avoid bankruptcy.

Several Credit Enquiries Can Affect Your Credit Score

You may ask why, but the frequency of credit inquiries reflected on your report can lower your credit score. Well, the reason is not far-fetched, the number of credit enquiries may send only one message to lenders – that you are possibly getting ready to go on spending spree. Consequently, if a credit card is not absolutely necessary, there is no need applying for it, this would help your score to stay up. Bear in mind that personal inquiries such as requesting for a copy of your credit report would have no ill-consequence on your score.

Once you keep your eye on these issues you can avoid reduction of your credit score. Since you’ve made up your mind to turn a new leaf, the FICO system has already made room to allow your current good credit behavior to erase past blunders. So, keep up the good work of striving towards an optimum credit score.

So, if you are really serious about cleaning up your credit report, you’ve taken one of the best leaps forward.

Here’s how you can clean up your credit report;

Get a Current Copy of Your Credit Report

This is the initial step towards sanitizing your credit report. It is necessary to get the report from each of the credit bureaus; Trans Union, Equifax and Experian. You may get a copy of the report free if there is a recent addition of a potentially negative item in your report. Another time you can get a free copy of your credit report is when your application for credit was not granted. In some states, it is the residents’ right to ask for a free copy of their credit report each year. In any of these manners, just ensure that you get a copy of your report from all the three credit bureaus, although they exchange information among themselves – any problem or error may appear on just one bureau’s reports.

Don’t Keep Silent on Negative Items

This is the major exercise in cleaning up your credit report. Dispute negative items featured on the report. The dispute is accompanied with a lot of follow-up letter writing. If you discover an item or items that are either false or inaccurate, writing a letter to the reporting credit bureau is usually the most efficient way to dispute negative items on a credit record. Also, remember to accompany your letter with the copy of any proof that renders the report void – this is highly recommended.

Allow Some Time for Your Dispute Processing

Usually, it is okay to wait for about 30 days while your dispute letter and proofs are being processed. The reporting credit bureau would normally visit the credit company in question with your dispute claims, to request for the company’s claims or proofs regarding the negative item reported. Usually, removal of the false information from your report would be done after 30 days if the credit company is unable to provide the claims or proofs requested by the reporting credit bureau. But, bear in mind that the inaccurate record may still remain in your report if the credit company provides proof within or after the 30 days allotted.

So, keep on following up on the process until the issue is satisfactorily sorted out. You can also seek help from a reliable credit report service company.