The way lenders determine the terms and rates of the loans the give you is by looking at your FICO credit score. The FICO score is a financial model developed by Fair Isaac & CO. which takes into account various parameters and determines the financial risk a lender takes when landing money to the borrower. Lenders look at the financial history of the borrower and his credit score to determine how much they will charge for the loan. You need to make sure your credit history is favorable and more often than not you need to take action to increase your credit score.
Features of FICO:
The range of scores in the FICO model goes from 300 to 850. People with scores closer to the 300 mark will pay higher interest rates and have less favorable terms than those with high scores close to the 850 mark. In general, FICO scores lower than 620 are considered risky by lenders and will make borrowing money much harder for the borrower.
The score is determined by using the following factors and their relative importance:
-35% is figured according to the payment history and past used credit terms.
-30% is figured by how much outstanding loans and credit one has.
-15% on the age of the credit history.
-10% of the score is determined by the number of applications were made for additional credit in recent months.
-10% of the score is determined by the types of credit that was used like loans, credit cards, leases etc.
For most of us that do not have plenty of cash or large savings accounts at our disposal, we need to have good and favorable access to additional loans and credit when we want to purchase something of higher value. Since lenders determine the terms and rates that they will charge us by looking at our FICO score and credit history, we need to make sure that score is high. In order to get that we need to work to clean our credit history and increase our credit score.
The normal tendency is to seek professional help to clean the negative items in our credit history in order to increase our credit score. The available options you have are outlined bellow and usually depend on your personal preference and good understanding what each option means.
METHODS TO INCREASE CREDIT SCORE:
1. CREDIT REPAIR AGENCIES is the first choice we usually make when not checking carefully the other alternatives. You need to know several important facts on this option first. They help by assisting in this new and unfamiliar task by providing all the necessary information to clear the credit history. With their knowledge and experience they can communicate in good terms with the creditors on our behalf. Most of the work in clearing credit history is in providing the necessary information and providing the supporting documentation and it has to be done by you. Also keep in mind that numerous agencies are fraudulent and you need to be very careful. Also remember that this option will cost you more than the other alternatives.
2. BOOKS AND MANUALS for the DIY Person: Instruction manuals and detailed guides on how to do it yourself. After reading the manuals and having a clear understanding of the process you can follow the step by step instructions and take the necessary actions to clean your credit history.
3. Less known but extremely effective way is to use CREDIT REPAIR SOFTWARE like Credit Repair Magic that provides the needed information and structured assistance in all the necessary tasks to clean your credit history. It generates for you the repeated letters and keeps track on all the activities. With this tool you manage it yourself.
If you choose to use a Credit Repair Agency you owe it to yourself to make sure you chose the right one. Not doing so can result in selecting a fraudulent credit repair agency that will take your money and leave you in worse situation than when you started. Make sure you verify and check the background of the agency of your choice before you start. Remember that the FTC advices consumers to take control of the process and do it themselves and with the DIY tools and software it can be done safely and inexpensively. - 31379
Features of FICO:
The range of scores in the FICO model goes from 300 to 850. People with scores closer to the 300 mark will pay higher interest rates and have less favorable terms than those with high scores close to the 850 mark. In general, FICO scores lower than 620 are considered risky by lenders and will make borrowing money much harder for the borrower.
The score is determined by using the following factors and their relative importance:
-35% is figured according to the payment history and past used credit terms.
-30% is figured by how much outstanding loans and credit one has.
-15% on the age of the credit history.
-10% of the score is determined by the number of applications were made for additional credit in recent months.
-10% of the score is determined by the types of credit that was used like loans, credit cards, leases etc.
For most of us that do not have plenty of cash or large savings accounts at our disposal, we need to have good and favorable access to additional loans and credit when we want to purchase something of higher value. Since lenders determine the terms and rates that they will charge us by looking at our FICO score and credit history, we need to make sure that score is high. In order to get that we need to work to clean our credit history and increase our credit score.
The normal tendency is to seek professional help to clean the negative items in our credit history in order to increase our credit score. The available options you have are outlined bellow and usually depend on your personal preference and good understanding what each option means.
METHODS TO INCREASE CREDIT SCORE:
1. CREDIT REPAIR AGENCIES is the first choice we usually make when not checking carefully the other alternatives. You need to know several important facts on this option first. They help by assisting in this new and unfamiliar task by providing all the necessary information to clear the credit history. With their knowledge and experience they can communicate in good terms with the creditors on our behalf. Most of the work in clearing credit history is in providing the necessary information and providing the supporting documentation and it has to be done by you. Also keep in mind that numerous agencies are fraudulent and you need to be very careful. Also remember that this option will cost you more than the other alternatives.
2. BOOKS AND MANUALS for the DIY Person: Instruction manuals and detailed guides on how to do it yourself. After reading the manuals and having a clear understanding of the process you can follow the step by step instructions and take the necessary actions to clean your credit history.
3. Less known but extremely effective way is to use CREDIT REPAIR SOFTWARE like Credit Repair Magic that provides the needed information and structured assistance in all the necessary tasks to clean your credit history. It generates for you the repeated letters and keeps track on all the activities. With this tool you manage it yourself.
If you choose to use a Credit Repair Agency you owe it to yourself to make sure you chose the right one. Not doing so can result in selecting a fraudulent credit repair agency that will take your money and leave you in worse situation than when you started. Make sure you verify and check the background of the agency of your choice before you start. Remember that the FTC advices consumers to take control of the process and do it themselves and with the DIY tools and software it can be done safely and inexpensively. - 31379
About the Author:
Want to learn out more on how to raise your credit score? , then visit Dan O Spark's site and get a FREE e-Book on how to Avoid The Most Devastating Credit Mistakes.
