Credit Report Secrets

Secrets to a 720 Credit Score

In this world of instantaneous approval or denial for credit. It is extremely important to take special care of your report.

Your credit score which is also known as a FICO score has become an principal evaluation of many Americans and can be widely shared. It is used to determine how much you can borrow, how much you pay for various insurance policies, if you can rent from a house or apartment from landlords, and it can be a factor in determining the interest rate you pay on a credit card or a mortgage.

Previously, only financial instituations or lenders checked your credit. Today, it is a common practice for a potential employer to perform an analysis of your credit report to determine your financial responsibility, obligations and payment history. Many employers have decided that your credit report paints good picture of the person you are and also let’s them know quite a bit about your past.

Proponents of such tactics state that although it is a picture of your past and present financial behavior, it is not always accurate. Credit reports and the agencies that provide them have been notorious for making errors on one’s report. Also,Having your identity stolen and consequently ending up with your credit report tarnished is certainly not an applicants fault.

Regardless, keeping a good score and knowing how to manage your own credit and credit report is crucial. Achieving great credit scores should be on your list of wealth building strategies. In the world of credit…..You’re Nothing But a Number.

Once you get your spending habits under control, and you are able to use your credit card responsibly, it is important to pay the balance off each month. Typically, credit card and loan companies will report your loan balances to the three major credit agencies by the 25th day of each month.

The ratio of your outstanding balance to the available credit limit will affect your credit score. The closer the balances are to the limits, the lower your credit score. Real estate and car loans which are known as “installment loans” on a credit report affect your score to a lesser degree than credit card accounts or “revolving accounts”.

If you know in advance that you will be applying for a loan in the near future, begin working on improving your credit report beforehand. Wayne Womack, a mortgage consultant with Pacific Mortgage Consultants in California advises that too many people are caught off guard when they apply for loans, very few actually spend any time ensuring their credit is accurate and that their score is as high as possible before applying.

Here are some general rules to follow to help keep up your credit rating:
Pay your cards off every month by the 20th day.
If you are going to keep a balance on a revolving credit account, keep it below 12% of the available limit.
Never close old accounts. This helps raise your “available credit to outstanding balance ratio”
When shopping for a mortage or car loan, only allow inquiries on your credit to occur within a 2 week window of each other. This way your credit score is only deducted for the equivilent of one inquiry request.

Follow these simple strategies for building credit, and you will be well on your way to becoming a desirable candidate for credit.