Credit

The idea of credit is simple: You receive something today in return for your promise to pay for it later. Many types of credit are available to consumers, which is probably not surprising to you. You probably receive offers all the time for new credit cards and lines of credit.

There's no excuse for not knowing what’s in your credit report. Getting the information is fast and easy. And don’t say you can’t afford it, because you can now request your credit report for free! One suggestion is Credit Improvers.

Ways to improve or maintain a high credit score:

1. Make loan payments on time and for the correct amount.
2. Avoid overextending your credit. Unsolicited credit cards that arrive by mail may be tempting to use, but they won’t help your credit score.
3. Never ignore overdue bills. If you encounter any problems repaying your debt, call your creditor to make repayment arrangements. If you tell them you’re having difficulty, they may be flexible.
4. Be aware of what type of credit you have. Credit from financing companies can negatively affect your score.
5. Keep your outstanding debt as low as you can. Continually extending your credit close to your limit is viewed negatively.
6. Limit your number of credit applications. When your credit report is looked at, or “hit,” it is viewed as a bad thing. Not all hits are viewed negatively (such as those for monitoring of accounts, or prescreens), but most are.
7. Credit isn’t built overnight. A longer history of good credit is favored over a shorter period of good history.

You can also request a copy of your credit report from each of the three credit bureaus once a year at no charge.

What Is a Credit Report?
The credit-reporting bureaus or agencies that issue these scores have different evaluation systems, each based on different factors. Some may take into consideration only the information contained in your credit report. The primary factors used to calculate an individual’s credit score are his or her credit payment history, current debts, time length of credit history, credit type mix, and frequency of applications for new credit. Because the scoring systems are based on different criteria, which are weighted differently, the three major credit bureaus in the U.S. (Equifax, TransUnion, and Experian) may issue different scores for an individual, even though the scores are based on the same credit report information. Credit Improvers gives you all three scores at no cost to you!

You may hear the term FICO score in reference to your credit score . FICO is an acronym for the Fair Isaacs Corporation, the creator of the software used to calculate credit scores. Credit scores range between 350 (extremely high risk) and 850 (extremely low risk).

There is no charge to order your free credit report. You can use Credit Improvers's free trial membership for up to seven days at no charge and receive your credit report. After the free seven day trial, you may choose to become a member of Credit Improvers.com for a monthly fee and receive unlimited access to your credit report, daily credit monitoring and fraud resolution support.

What Makes up Your Credit Score?
When you borrow money, your lender sends information to a credit bureau, which details, in the form of a credit report, how well you have handled your debt. From the information in the credit report, the bureau determines a credit score based on five major factors: 1) previous credit performance, 2) current level of indebtedness, 3) time credit has been in use, 4) types of credit available, and 5) pursuit of new credit.

Why Your Credit Rating Is Important
When you apply for a credit card, mortgage loan, or even a phone hookup, your credit is checked. Credit reporting makes it possible for stores to accept checks, for banks to issue credit or debit cards, and for corporations to manage their operations. Your credit score helps lenders determine how much risk you pose to them when they give you credit.

According to financial theory, increased credit risk means that a risk premium must be added to the price at which money is borrowed. Basically, if you have a poor credit score, lenders will not shun you (unless your score is utterly awful); instead, they’ll lend you money but at a higher interest rate. The following table shows how individuals with varying credit scores pay dramatically different interest rates on similar mortgage amounts — the difference in interest has a large impact on the monthly payments (which pay off both interest and principal):

Businesses make money when you use credit, so they want you to use it as often as possible. From a lender’s perspective, you represent a risk when they give you credit. The level of doubt between a lender making money when they extend credit to you and losing money, determines the terms of the credit you receive. But how does a lender determine the likelihood of you paying them back on time and as promised? The answer: your credit report and, increasingly, your credit score.

From the interest rate and features you’re offered on a credit card, to your ability to qualify for a mortgage loan, your credit report is like your financial life history of borrowing money and it’s important.  A good score can have banks competing for your business when you apply for a loan. A bad score may mean that you won’t qualify for your auto, mortgage, or credit card - or if you do, you may only be offered credit at very high rates, which will cost you extra money each month. A bad credit report can also affect what you pay for insurance, whether you can rent that great apartment you found, and even whether you’ll be hired for certain jobs!

Knowing your score is the first step toward understanding your credit picture. Credit Improvers is a great way to get your current score and credit report so you can be knowledgeable about your own credit history. Understanding your credit report and credit score will help you to navigate through situations that could cost you thousands of dollars more or even deny you future opportunities. Plus, you can catch inaccuracies on your report, which are pretty common, and correct them.