How to rate, increase, maintain a good credit score?

How to rate the credit score?

Mostly the credit scores operate within the range of 300 to 850. There are different categories which scales from bad to excellent. Usually the credit score ranges in the following points:

1) Excellent Credit - 750 to 850

2) Good Credit - 700 to 749

3) Fair Credit - 650 to 699

4) Poor Credit - 600 to 649

5) Bad Credit - under 600

Though, these scores are not fixed and it may vary depending upon company and bank. Similarly, every lender have different eligibility criteria and they have different requirements as well. There are several Credit Score range scales like FICO Score image, Equifax Credit score, TransUnion New Account score 2.0, etc. All these scales can be used to calculate credit score of an individual.

There are several websites that provide free report of credit score and you can get a personalized report by submitting some basic information. You will also get information about the factors that have badly affected your score. You will also get recommendations and reviews for making your credit score stronger. Get tips and tricks to improve your credit score from various websites.

Ways to maintain a good credit score

To maintain a good credit score in the long-term, one must pick one credit score and monitor your progress regularly. There might be several risk-factors which affect your score. Your credit score is based on the following five categories:

1) Payment History

2) Credit Utilization

3) Length of Credit History

4) New Credit Inquiries

5) Mix of Accounts

You can maintain a good credit score by making all of your payments on loans and debts on time. Keep the total amount of debt that you owe below than 30% of your total credit limit. Maintain credit accounts for long term and have a mix of accounts in various banks. Low credit score can lead to disapproval of loans, mortgages, etc

In-depth analysis of ways to improve credit score

It is difficult to repair bad credit score and it is nothing similar to repairing a car or a vase. To improve your credit score, you will have to spend years to bounce back from default and delinquency. With a bad credit score, you will face many rejections from banks for loans or credit card. Similarly a good credit score will enhance the chances of your loan or credit card approval. Lenders use credit score to gauge how likely you are to repay debts on time. This score id derived through the information compiled in a credit report which also includes your payment history. It has a section which shows the amount you owe to other lenders and also the amount of credit that is available to you.

You can login to any popular credit reporting agencies that offers a free report and review of your credit score. You can also purchase it from several major sites. There are several ways to raise your credit score. You can do so by following the points below:

1) Keep your monthly due balance of credit low and repay all your interest and other dues. Keep a good track of your payment history as it is essential to maintain a good credit score. Lenders and bankers look for a proven and consistent track record of making timely payments by the person as it determines about 35% of your credit score. The total amount of the credit score comprises of 35% based on payment history. If you regularly pay the amount after due date or you are always late in paying your dues then your percent will be low that can dramatically affect your score.

2) Be aware and conservative in the amount of available credit assigned to you according to your ability and keep your monthly due balance as low as possible. This part is called as 'Utilization ratio' which is basically the amount you owe in relation to the amount of credit available to you. The due percentage should not exceed 50% of your credit limit because it can negatively affect your credit score. Keeping a 30 percent is enough to maintain a good credit score. After all, you should not use all your credit limit because it is unethical.

3) Keep old bank accounts or credit accounts to show commitment and relation with other banks. Keep your old accounts active and do not change your accounts frequently as it is not only a waste of time but it can affect your credit score too. Hold on one account to have all your transactions at one place. The longer you hold an account, the higher score you will get in return.

4) Maintain a diversified credit mix that can help you score high as well. It impacts 10% of the credit score. Just in case if you have a home mortgage, a credit card and an auto loan then you are likely to score higher to to the diversity of approved loans and credits on your name. Thus, it can help you score high.

That's not all, you must keep this simple tricks in your mind as well to keep your credit score above average:

1) Know what is good and bad for your credit score.

2) Pay your bills before deadline.

3) Keep your credit card withdrawal balance low.

4) Low debt means better credit score.

5) Do not close your old accounts

6) Limit your applications for new debts.

7) Get annual credit report.

8) Try at various organizations for loan.

If you want any further advice on credit score and ways to maintain it then comment below

Factors That Does Not Affect Your Credit Score

There are several things that does not affect your credit score but people have a perception that it does. We are here to clear this doubt and inform you about the several things that does not harm your credit score. Your daily life financial transactions does not count in your credit score. There are few things that you can simply neglect for few days because it does not affect your credit score at all. These are mentioned below:

1) Bank overdrafts - If you overdraw your bank account then you might have to pay hefty interest and it is usually expensive way of getting credit. Fortunately, it had no effects on your credit score as long as you pay it back before they go to the collections department. If you do not pay the overdrawn amount for several weeks then the bank transfers your name into the collection list at a collection agency and your credit score can drastically decrease. Still, if you pay back the overdrawn amount then you do not have to worry at all.

2) Income of a person - Your salary and information of the employer will be mentioned in your credit report but it does not have any direct effect on your score. Your actual income is not considered while calculating your credit score. The creditors and lenders decide the amount of loan that can be given to you according to your pay back capacity and current salary but it certainly does not have any direct impact on your credit score. Having a high or low salary will not have any effect on your score. A low salary will not drag your credit score down so do not worry about that and just focus on your payment history.

3) Child support and alimony - Just in case, if you have to pay child support or alimony payments then you do not have to worry about its impact on your score. It does not affect your score till the case goes into a collection agency and they get involved. If it does then your credit score will drop significantly and you might get arrested too. Your spouse could sue you in this case for the missed payments and you might be liable to punishment so avoid that at all costs.

4) Payments of Insurance - Insurance companies insure whether to insure or calculate the insurance premium by checking your credit score. But, they only use your credit score to make decisions about you and they do not use your score or affect you score in any way. Untimely payments of insurance won't affect your credit score. Insurance company will only cancel your policy if you fail to pay the insurance payments. So do not worry about it.

5) Rent payments - Paying your rent late or early have no effects on your credit score as it is not calculated. But if your rent payment delay leads to an eviction then it will hurt your score and it will also affect your ability to get loans or credits. In some cases, rents are also calculated but they are minimal. Even if you pay a high rent, it will not increase your score and neither it will affect it in any way.

6) Cell phone or connection payments - Utility and cell phone providers might check your credit score occasionally but they do not provide information to credit bureau. Timely payments or delays in cellphone or utility bills has no effects on your credit score. If you fail to pay these bills for a long period of time then your account is passed on to a collection agency and they might list the account on your credit report leading to a score drop.

7) Checking your own credit - The best part is that you can check your credit scores as many times you want without worrying of a negative effect on your credit score. So keep a regular check on your credit score and find ways to improve your score. your score won't drop a single point if you check you score from a reputable site or agency like FICO, the credit bureau, Annualcreditreport.com, etc.

8) Credit counseling - There are several myths around credit counseling and people consider it bad fr your credit but it is not true at all. The credit counselling is mentioned on your credit report but it has certainly no effects on your score whatsoever. Pay your counsellor on time and prevent yourself from getting sued due to non-payment. If you stay away from late payments of any nature then you have no reason to worry about your credit score.

9) Interest rate - The interest rate does not affect your credit score in any case and your credit score do affect your interest rate. The higher you score, the lesser you will pay. If your score is good and consistent then bank or lender offers you a great deal with low interest rate. Having high interest rates on your loans or cards will have no effect on your score.

10) Age of the applicant - Be extremely clear about this fact that your age is not included in the credit scoring calculation. Your age directly does not affect your score in any way but the older you are, the better payment history you will have is just an example of indirect effect. In any case, it does not decrease your score in any ways. So even if you are young, do not worry about getting a loan.

How To Reverse Bad Credit Score?

Do not worry even if you have a bad credit score as it is not permanent and with consistent effort you will be able to change it. Bad credit can be stressful and depressing because all we need is that new car or new house or something that costs a fortune. A loan might change your life completely. A education loan can help you excel in your education or get to your favorite university or a home loan can be extremely helpful in buying a shelter for yourself at the times when property is so expensive. Imagine that you have the right ideas for a startup but you do not have any investments then a personal or business loan can be a good option to get closer to your dreams. These simple steps will reverse your bad score into good score in a short period of time:

1) Get a detailed legitimate credit report and analyse it properly. See the risk factors and focus on those sections first. Get a copy of your report and get a highlighter. To improve your score, you must first know where you lack. Getting a review from a professional can be adequate too but you can do exactly the same by yourself without hiring an expensive counselor.

2) Credit report error dispute - You have the right to know your correct credit score and this right also allows you to apply or dispute credit report errors. You can do so by writing to the credit bureau or the creditor who listed your account. Every error is important and they are not meaningless. Errors can hurt your score a lot and a mistake in your report can be very annoying. So if you think that any information or calculation is mistaken or wrong then dispute credit report.

3) Avoid extra credit card purchases - Now when you have bad credit then you must not make new credit card purchases as it will reduce the Credit utilization percent. Reduce your purchases and payments and do not use you credit card frequently. Cut down unnecessary expenses and save some money as well. Forget about the latest collection of shoes or clothes and focus on increasing your credit score.

4) Pay all past dues and neglect future dues - If you have any dues pending then pay them back and wait for sometime till it becomes past. With time, your score will improve and the effect of dues will reduce. Contact your credit card issuer and talk for settlement on kissed payments.

5) Get professional help - Consumer credit counselling are available 24/7 to assist you in improving your score and they can tell you exactly what you need to do next to get your score a positive boost. Get a professional to analyse your credit report and take his advice for future.

With patience and persistence, your score will improve drastically. Your score did not get worse over night and it cannot be improved overnight, it takes time and efforts. follow our advice and get on the path to improved credit score. We have included all the points that you must consider before applying for loan and keep it in mind to enhance your chances of getting selected among the thousands of applicants for loan or credit. Banks will consider your credit score first and later any thing will be taken into consideration. Thus, maintain a stable score to be in the good books of bankers and lenders. With time, you will see that maintaining a good credit score is an easy job. Our experts have listed all these points to help people stay ahead in the game