Repair Credit Score
If you are cleaning up your credit report then you understand the importance of your credit score. Your credit score can impact your lifestyle more than by how much money you make.
With a bad credit score you may be having employers turn you away from a job. You may be unable to purchase a home or get approval for an auto loan or a credit card. On occasions when you are approved it is at sickening interest rates.
If you learn how the credit system works than you can use that knowledge to better your credit score. With a higher credit score you will be able to make the purchases you want or have extra money because you are not spending it on high interest rates.
The credit bureaus use a mathematical equation to determine your credit score. The bureau puts your credit information into a computer and the computer spits out your credit score.
This three digit number is the yardstick by which employers, lenders, and others see your creditworthiness. In fact, most new credit transactions a lender never looks at anything other than your credit score. You are judged solely by this number.
How can you use the credit system to your benefit? You need to know there are two pieces of information that are most important to the systems equation.
1. Delete negative inaccurate accounts. Derogatory credit items do the most damage to your score and should be removed as soon as possible.
2. Maintain an unsecured revolving line of credit. This is an easy technique that almost anyone can do.
The credit bureaus equation is kept secret and not released to the public. However after review of thousands of credit files it has been learned that having an open unsecured line of credit is just as important as removing negative items.
The unsecured line of credit will improve your credit score because:
1. A credit line adds a trail of positive payment history. The credit bureaus also like to see an account that is aged.
2. Increase your ratio of debt to credit. This is how much credit you have in relation to how much debt you have. You want to be able to show the credit bureaus that you are not using all your available credit.
Your open credit line will carry more influence on your score if it is unsecured. However if you can not be approved for an unsecured loan then I would suggest a secured credit card.
An open credit line will help you build credit but it is still very important to erase derogatory listings from your credit report. If you can not get an unsecured credit line and do not want a secured line of credit then remove the derogatory listings and reapply.
It is possible for everyone to achieve a 700 credit score for themselves. So start today and erase the derogatory marks and build positive marks on your credit report.
Filed under: Management