| Every now and then there are seminars at various | | | | mortgage lender probably report to two of them or |
| places in major cities to explain to consumers how | | | | perhaps all three. The key here is that none of them |
| credit works and how their credit score is calculated. It | | | | have a true complete picture of your credit history, and |
| is surprising to note the typically poor turnout at such | | | | it is up to you to correct their misconception. |
| events, since most people figure they already know as | | | | The other thing most people do not realize is that the |
| much as they need to know on the topic. | | | | majority of consumer credit reports contain errors. This |
| The truth is that they could not be more wrong in that | | | | is not done purposely or maliciously, but errors creep in |
| assumption. How your credit score is calculated | | | | since much of this is a manual process, and those |
| changes every now and then, and what was true 5, 10 | | | | errors once introduced will remain there forever until |
| or more years ago is totally different today. The vast | | | | YOU get them corrected. They do not "auto correct" |
| majority of consumers do not realize what | | | | over time. |
| components are used to calculate their credit score, | | | | There are various things you can do, in addition to |
| and making payments on time for your existing credit | | | | ensuring that the errors on your credit report are |
| cards is only a small part of the whole equation. | | | | corrected or removed, that will serve to raise your |
| The bottom line use of a credit score is that it is a | | | | credit score. For example, since one of the criteria is |
| number calculated by the credit reporting agencies that | | | | how close your outstanding balance is to your credit |
| is supposed to summarize the amount of credit risk or | | | | limit, you could call and request a higher credit limit, and |
| credit worthiness that an individual or business has. | | | | once approved, then that same outstanding balance is |
| Lenders use the credit score number to determine | | | | a lower percentage of your limit, which gives you a |
| whether or not to approve a loan or new line of credit, | | | | higher score. |
| and if approved, to determine the interest rate that will | | | | Another myth is that you get a better score by |
| be assessed. | | | | transferring all your debt onto one credit card. Not only |
| True, one of the main criteria used to compute the | | | | is that untrue, that can actually hurt your score by |
| score is the number of accounts that the person has | | | | lowering it, since then you have less credit open and |
| open, the length of time they have been open, how | | | | the one you do have open is much closer to your limit. |
| often they have gone over their credit limit, and do | | | | There are many things you can do to improve your |
| they have a history of making on time payments. | | | | credit score, and you need to understand the facts |
| But there are two things that most people do not | | | | about what factors are important and what are not. |
| realize. There are three major credit reporting | | | | Do not depend on urban legend or old wives tales to |
| agencies, and they do not share information. Some of | | | | make that determination, since a higher credit score |
| your creditors report to one of them, others report to | | | | can favorably impact you in many different areas of |
| another one, and some big ticket items such as your | | | | your life. |