credit reports

When is the Best Time to View Credit Reports?

There are a lot of common myths when it comes to credit scores and obtaining credit reports. Some of these myths include, ‘checking your credit report will lower your credit scores,’ and ‘viewing credit reports is expensive and unnecessary.’ These myths, of course, have since been discovered as untrue, and more and more people are wondering what is actually right when it comes to credit reports.

The truth is there are a few times in a person’s life when it is not only beneficial, but very important to get their free credit reports from CreditSesame.com or Wallethub. Getting credit reports at these times can help anyone make better financial decisions, reduce and avoid debt, and plan better for their future. Anyone can use these tips to help them decide when the best times to get their credit reports are. Here are some of the best times to view credit reports.

When is the Best Time to View Credit ReportsRight now

It has been said that there is no time like the present. People who have never checked their credit reports or have not checked their credit reports in a year should check them right away. A lot of changes can happen to a person’s credit report over the course of a year, so a good rule for anyone is to check their reports annually to make sure they are still on track to meet their financial goals.

When getting ready to take out a big loan or line of credit

Taking out a loan or getting a new line of credit is a big financial change. These changes almost always effect a person’s credit reports, and people who are unaware of what is on their credit reports say may not be as prepared as they should be to apply for a loan or line of credit. Credit reports can help people become the most prepared so they can understand not only what they need to do to get their loan or line of credit, but also what they will need to do to pay off their loan or maintain their credit.

When planning a savings budget for the future

Saving for the future is something everyone does, or everyone should be doing. Saving for the future allows people to live comfortable throughout their life and prepare for their children’s lives. When planning out how to save for the future, credit reports can be a big help. Credit report information can help people make a plan for saving and create a more stable financial future.

When some unusual activity happens

Sometimes there are unusual activities that happen to a person financially. A couple examples, include being turned down for a loan or receiving an unusual bill. These may be small misunderstandings, but they could be a red flag for a bigger issue. Checking credit reports can rule out that those situations are identity theft or fraud.

When trying to get out of debt

Everyone has some debt at one point or another, but having too much debt can cause serious financial issues. Anyone who wants to make a plan to get out of debt should start with their current credit reports.

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The Three Steps to Fixing Your Credit

There are a couple of things that you need to know about having less than perfect credit  The first is that there are more people out there whose credit profiles are not nearly as awesome as they’d like them to be—so there is no reason to feel embarrassed about your score or situation. The second is that credit scores change all the time. The credit you have now is not the credit you’ll have next month or next year. This means that you can fix your situation.

Step One: Finding Your Starting Place

The first thing that you need to do is get copies of your credit reports. You are entitled to at least one free credit report every year from each of the three major credit bureaus: Equifax, Experian and TransUnion.

It’s important to understand that accessing your credit reports does not necessarily mean learning your credit score.

Once you have your credit reports, you’ll want to make sure they are absolutely accurate. This means going over every detail and making sure that it is correct. If you see something that is even a little bit off, you need to dispute that detail with the reporting bureau. In addition to raising your credit score, it is important to get a clear and accurate idea of how much work you are going to need to do.

building-creditStep Two: Fixing Bad Credit

Most of the time, the key to fixing bad credit is getting back on track with your bills. Don’t worry about the payments you’ve missed in the past. You can’t do anything about those now. What matters is that you create a positive and steady payment plan for your future. It is also important that you work very hard to reduce your debt to income ratio. Your debt to income ratio is a big factor in your overall credit score. It is what lenders look at when you apply for loans or financing.

The best way to reduce your debt to income ratio is to increase the amount of money you send in to your creditors each month. By now you already know that you need to pay more than the minimum amount due if you ever want to get out of debt. Even $5 more toward that balance is a good thing. A better way to do it though, is to take your minimum amount due, add however much you are charged in interest every month and then tack at least $10 (though 10% is better).

If you have a lot of bills or if you’re worried that you won’t be able to afford to make even your monthly payments each month, don’t panic. Many creditors are willing to work with clients when it comes to things like interest rates and minimum amounts due. They’d rather reduce your interest rate than lose you as a customer. If this process intimidates you (or if you don’t have time to call and haggle with all of your creditors), a credit repair service can reduce the stress of the process. These companies negotiate with creditors on your behalf and help you set up budgets and payment plans that you can afford to keep.

Step Three: Building Good Credit

Don’t wait until you are out of debt to work on building good credit for yourself. You need to work on both simultaneously. Yes, paying down your debt and creating a positive repayment history will accomplish part of this goal. The other part, though, is proving that you can handle credit responsibly. The easiest way to do this is to open a secured line of credit with your bank.

If you are willing to work hard, you can fix your credit. It won’t happen overnight. It might take a few years—but it will happen.


How Your Credit Score Is Determined

credit scoreLike income taxes and 401Ks, credit scores can be mysteriously difficult to understand. With the overwhelming majority of the population being affected by them, one would hope there would be a simple method for individuals and families to calculate their own scores. Of course, the same could be said for taxes and retirement plans, but we know how that story goes…

Although the specific calculations are convoluted, and typically hidden from the public, the commonly accepted and standardized scores used by lenders are made up of five primary factors listed below, in order of highest percentage of impact to lowest:

35%:  History of Payment

If there is one question lenders want answered, that question is: Will payments be made on time, and in full? Above all else, this single fact determines worthiness and reliability in lending. More than how much money is in an account, more than how much income a household makes in a year, this is the key: if a history of paying the proper amounts on time can be shown, the most important base has been covered.

Although an occasional late payment is a rather common accident amongst American families, credit scores don’t react nearly as badly to one late payment as it does consecutive or patterned late or non-payments. Do not panic if a single payment was accidentally missed; the scores looks for repetition.

30%:  Amounts Owed

This factor can be initially misleading, in that people tend to assume that the higher amount one owes, the lower their score must automatically drop. However, there is a critical difference to be made: the significant amount is the ratio of available credit that is being used. Simply put, the lower the percentage of available credit, the lower the score.

The reason creditors care more about percentages and ratios than raw amounts is that when an individual is using a large percentage of their available credit, they are considered financially over-extended, and carry a higher risk of not paying on time. Again, paying on time and in full is so important, that not only is payment history the strongest credit score factor, but the next strongest is simply trying to show lenders if people will pay on time in the future.

15%:  Length of Credit History

Another factor that is commonly misinterpreted, having a longer credit history does not necessarily translate to a higher score. If poor credit is shown over a long period of time, that will have a proportionately negative effect on a score as having good credit for the same length of time would yield a positive effect.

Yes, lenders are certainly more leery of rookie or inexperienced credit users, but a score is not automatically low just because an individual or family is new to credit. In fact, only a few months of reliable credit payments actually yield quite a high score, but to get a score to prime levels, it does require good behavior shown over a longer duration.

10%:  Types of Credit

With the wide variety of credit cards, loans, installments (monthly payments), mortgages, and other types of credit available, more is not always better. Results seem to show that the two most noteworthy conclusions to draw from this section are 1) lenders prefer users who have managed credit cards properly, to those who have not managed them at all (meaning using a card is probably worth your while), but 2) do not open a credit card or other form of credit unless you intend to use it.

Paying monthly installments, a mortgage if one is in use, and a responsible credit card is more than enough to boost this portion of the credit score.

10%:  New Credit

The myth that simply opening a line of credit will drop your credit has been exposed; this is simply not the case. However, a dangerous red flag to lenders is when a household opens up multiple forms of credit in a very short amount of time, particularly if that household is not already an established, trusted credit user. When getting started, avoid rapidly opening multiple accounts.

Written by Clif, a freelance writer for SereniCare Corporate Marketing, a Phoenix-area franchise opportunist. For further questions about credit scores, you can find more in-depth explanations at myfico.com. I hope this post was an enjoyable and worthwhile read for you.


How Can I Improve My Mortgage Credit Report?

There’s a new buzzword around town. And that buzzword is “mortgage credit report.” And it’s definitely in your best interest to pay attention to this new buzzword. Because if you ever hope to buy a home it is vital to know how important these mortgage credit reports truly are.

Mortgage credit reports explained

mortgage_card_explainedSo let’s start off with the basics, shall we? In order to recognize how important mortgage credit reports are, you first have to understand what they are. They really are a basic concept. When mortgage companies are considering you for a mortgage loan (and deciding what interest rate they will charge you), they want copies of all three of your credit reports. If your husband/wife will also be on the loan, they want copies of all three of their credit reports also. That equates to pages and pages to analyze in their loan acceptance process. That takes too much time.

So, in come Mortgage Reporting Companies. Instead of your mortgage lender having to pour over these endless pages of credit reports, they hire these mortgage reporting companies to do that for them. Mortgage reporting companies order copies of your credit reports and consolidate them into one report. This consolidated report created by the mortgage reporting company is called, you guessed it, your mortgage credit report. It is the information found in this report that is used by mortgage lenders to decide your acceptance or denial for your loan, and of course your interest rate. Everything to do with your mortgage loan rests on the information found in your mortgage credit report.

Ways to improve your mortgage credit report

Now that we’re all on the same page of understanding the importance of mortgage credit reports we can get down to the reason why we’re here: discussing how we can improve these reports. First things first, you are probably wondering how to access your mortgage credit report. As of right now, the only way for you to access your mortgage credit report is if you’ve already been issued a mortgage loan. If that is the case, then your mortgage credit report should be included with your closing paperwork.

If you don’t already have a copy of your mortgage credit report, don’t fret. You can start by accessing copies of your normal credit reports from the three major credit bureaus (Equifax, Experian, and Transunion). If you are wanting to improve your mortgage credit report this is probably your best bet anyway, because the information found on your mortgage credit report is pulled from your major credit reports anyway.

Now on to improving these reports. There is no way to go about particularly improving your mortgage credit report on its own. That is because, as explained above, the information found on it is pulled directly from your other credit reports. So if you want to improve your mortgage credit report, then you would go about the same processes and steps that you would use to improve your normal credit reports and scores. As your normal credit reports improve, then so will your mortgage credit report. So, the typical steps that you would use to improve your credit, including paying your bills on time, paying down balances, working with a credit repair company if needed, etc, will all also help to directly improve your mortgage credit report.

That is the good news! You don’t have to take any extra separate steps to improve your mortgage credit report. It really is that basic: if you want to improve your mortgage credit report, then start by focusing on improving your basic credit reports. As you see improvements in your normal credit reports, your mortgage credit report will simultaneously improve. This new and improved mortgage credit report will help you to find easier acceptance on a mortgage loan, as well as lower interest rates for your new home.

This article was contributed by Chase Sagum. Chase writes about credit repair and personal finance issues/opportunities.

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