Things You Need to Know About Credit Scores
When it comes to credit scores, most people have little knowledge beyond its effect on their ability to borrow money and getting a good interest rate. If this sounds like you, here is some information to help you understand credit scores and tips to improve your score in order to have a successful unsecured personal loan application.
First, Experian, TransUnion and Equifax are the three credit bureaus in the U.S. These agencies housed your credit history, but they have no say into your score computation. Fico and Vantage Score Solutions rate your credit risk and determine the appropriate credit scoring. Lenders in turn look at either one of these companies score and then looking at your employment history, stability and other factors to determine your credit risk.
Generally, credit scores vary slightly. For example, Fico uses more than models to determine your credit score range. This means that one lender may see one score and another lender sees something slightly different. Therefore, you should concentrate on the score range rather than one specific number and work on the issues causing the low scores.
Things that affect your credit scores include paying your bills late, maxing out your credit limit and having high debt to income ratio. The debt to income ratio is your monthly expenses divided by your monthly gross income. The debt to income ratio is a bit difficult to resolve quickly as it might mean working another job to increase your income. Late payments can be fixed by paying your bills on time, paying more than the minimum amount due and not using all your available credit.
Usually, if you apply for credit and the lender refuse to grant you credit, the lender will send you the denial reason in the mail. This information serves as an educational tool to improve your score. Simply work on correcting the flaws in the letter and with time and patience you will see a difference in your score.
The credit score process is complicated but hopefully some the tips provided here give you some understanding of the scoring process and some tips to help you improve your scores.