The consumer who regularly checks their credit score may be surprised that the credit score can change so quickly. Furthermore, if all three of the reports are requested at the same time, another surprise may be in store. The 3 digits that represent your credit worthiness may not be the same on all three of the reports.

Each of the credit bureaus uses a different system for computing the credit score they provide, even though they all work from the same information. This means that each agency will show a different number.

If the difference of the score being reported is significant, go over every item on each report to make sure that the information is accurate. If there are any errors, contact the agency you received the report from and request that they correct the information. Under the federal Fair Credit Reporting Act, they are obligated to investigate and correct the information that you dispute.

How Your Credit Score Ranks

The success you will have when you apply for a new line of credit depends a lot on your credit score, so most experts advise you to know that number before you fill out your application. But how do you judge whether the number that they come up with is considered good or bad? A lot of times it just comes down to what type of credit you are applying for.

A credit score can range from the 300 range up to approximately 900. While you are considered a better financial risk with a high score, most people fall between 600 and 800.

If you are applying for a mortgage, an acceptable score would be anything above 660.  By Freddie Mac standards, you would be considered an uncertain candidate if the score was between 620 and 660. The mortgage lender may feel that they would have to do a complete review of the credit history. It’s very difficult for people to get home loans for low credit scores, for example, below 620 points.

A credit card company will look at your credit history along with your credit score. If you have made your revolving payments on time, it would improve your chances of getting your credit application approved even with a low credit score.

Companies who approve auto loans have different criteria that they use in addition to the credit score when they are considering approval of financing for a vehicle. They will consider the debt to income ratio of the applicant. The time that the borrower has worked at the same place of employment will also be considered. In addition, the amount that the car buyer is willing to put down upon purchase of the vehicle may also make a difference on whether or not the car loan will be improved.

If the application for credit involves a fee, let the lender know what your credit score is before you apply. There is no sense in paying the paperwork fees for an application that will automatically be denied. Sometimes you may be surprised and find that the way that they calculate the risk may make your chances for approval higher.

Building and maintaining a good credit score is a task that should be attended to on a routine basis. The score is not just a number that takes care of itself. Even if you do not quite understand how the individual credit reporting agencies come up with the number, there are steps that you can take to raise your 3 digit score so that you are seen as a financially responsible individual to each person to whom you allow access to your credit report.

The types of credit accounts that you have held and made regular payments to in the past will reflect on how well you have been maintaining a good credit score. When your history shows that you can manage a variety of loans such as a student loan and a car loan, you show that you are a good risk. The best type of an account, however, is a revolving account. This is the type of credit account that you have when you use a credit card and it is the type of credit that impacts your credit score the most.

The reasoning behind the appreciation of how you handle your revolving credit account is that you make the decisions in controlling the options available to you. You decide how much to charge during the credit cycle and you also determine how much your payment will be on a monthly basis.

Tips to Managing your Revolving Credit to Maximize Effect on Credit Score

If you are able to keep the outstanding balances of your revolving credit account low, it serves to show that you are able to avoid using your available credit impulsively. When your revolving credit limits have almost been reached on a number of credit card accounts, it could be interpreted that you are either making poor purchase choices or that you are having a hard time meeting your budget and have to resort to putting expenses on your credit card to get by.

The companies who make inquiries of your credit history can also affect your credit score. Even if you have applied for new credit and have not yet been approved, the request for a copy of your credit report will appear in the recent inquiries portion of the report. If there have been several inquiries from revolving credit companies, it may be perceived that you are looking for new credit because you are trying to borrow enough money to live. To avoid this perception, do not apply for a new credit card account unless you really need it. Balance the risk of your credit score taking a hit against your reasoning for each new application.

The national average credit score is 740. That average has held steady over the past year, although the regional number can be higher or lower. Regional averages will not impact your credit score directly, because the score reflects only your own credit risk based on your own personal history.

In areas that have a high unemployment rate, more people face the risk of their credit score taking a hit because they may not be in a position to make on time, regular payment on all of their accounts. In areas that have a lower unemployment rate, the opposite is true. There is a higher percentage of people who can depend on a good income and keep their financial responsibilities up do date. Remember that the average credit score in your region has no impact on you maintaining a good credit score unless the underlying factors directly impact you. In today’s economy, it is up to you to do the work needed to build and then keep maintaining a good credit score.

Put yourself on the top of your holiday shopping list this year by remembering how important it is to keep working on raising your credit score. The three digits are very vulnerable as the average person tries to find the perfect gifts for everyone on their list. After all, we have been conditioned to view the season as a joyous time of giving and this makes us feel good about spending money. The damage done by shoppers who put more emphasis on giving to others than they do about taking care of themselves run the risk of getting into financial difficulty when the gift giving gets out of control.

Tips to Protect Your Credit Score During the Holidays

As the purchases are scanned at the checkout, it’s easy to watch the escalating balance with a touch of anxiety, especially if you have not planned the shopping trip well or added extra items to your cart because you could not pass up the highly discounted price. You may be tempted when the cashier asks you if you’d like to fill out a credit application and get a percentage off of your total purchase.

Don’t ever lose sight of the fact that each line of credit that you apply for will make a negative impact on your credit score. The store will look at your credit history as part as the approval process, and this will be noted o n your report. Remember your commitment to increasing your financial stability and decline the offer and the discount. Use the cash that you have set aside for your purchases and pat yourself on the back for escaping the pitfall.

When you’re planning your holiday shopping, make sure that you have a complete list so that you are not tempted to make the impulse purchases that put you over budget. If you are planning to send out holiday cards, make sure to add postage stamps to your list. Postage can add up quickly. Consider sending e-cards instead. There are many places to find attractive cards that you can email to those close to you. Most the sites give you the opportunity to add your own message that can often be seen as a more personalized greeting that the expensive cards that will be tossed into the waste basket as the holiday decorations are cleared away.

If you are planning a holiday gathering, plan the menu, including the tableware right down to the napkins so that you aren’t faced with trying to decide if you should splurge on the festive tablecloth at 70% off the regular price.

Decide how much money you will spend on gifts and food, and don’t go over budget. When you arrive at the store, if the item is more expensive than you had planned, look for a substitute.

As the holidays get closer, many people find that last minute ideas pop into their head that will make the season special. Last minute purchases that aren’t on your original list can be budget breakers. They are usually more expensive and it may take a lot of time to search the items out. If you don’t have the cash to pay for these items along with the extra gas that you will use as you search them out, don’t buy them.

Stay on track to repair your credit and raise your credit score by making a complete list well in advance of the holiday. Create a strict budget, decide how much you will spend on each person and don’t be afraid to cut, cut, cut from your list. Not only will the planning eliminate a lot of stress from your holiday, the New Year will find you on good financial footing.

Many people are upset when they discover that their credit scores are lower than what they expected them to be. If you find that all of the information on your credit report is correct and that the low score is a proper reflection of your credit history, do not let yourself be satisfied with that low score. This could not only make you a bad risk for future credit approval, but it could affect the interest rate that you will pay on any credit accounts or loans that you are able to get. Lenders want to make sure that they are paid on time and will make it easier for your application to get approved when you have a history of financial responsibility.

Make a firm commitment to raise your credit score. Timely payment on all of your accounts is the best way to see results quickly. Almost everyone owes money, so it is not the number of open accounts that you have that is causing a low credit score. A credit history that shows that you can be financially responsible with your credit by not overextending yourself and paying the amount due on time on a regular basis is one of the best ways to get that credit score higher.

Because your credit score may vary from company to company, it is obvious that each calculates the score in a different way. Economic experts seem to agree that up to 35% of the overall score is calculated according to your ability to pay bills on time, as well as your history of doing so. That makes the timely payment of your accounts one of the easiest ways to improve that score.

Do not expect your credit score to go up immediately. Your willingness and ability to pay your bills on time will have to be proven over a number of months. Hopefully, during the time that you are waiting to see an improvement on your score, you will find that your debt is going down because you are no longer being assessed with additional fees because of late payments.

Even if you make regular payments on all of your accounts, you may be causing damage to your credit score if you appear to have overextended yourself. Credit bureaus and lenders know that if your credit report shows a large load of debt compared to your income, any crisis that may happen in your life could affect your ability to pay your bills. It is important to limit the number of credit accounts that have balances on them to what you really need.

If possible, pay down your debt. If you have maxed out your credit cards and make only the minimum payment, you have no available credit. This will lower your credit score. For the best results in your attempts to raise your credit score, try to pay down your credit accounts so that you are not using more than half of your available credit.

If you are trying to build credit because you are just starting out, it is important to remember that if you apply for a lot of new credit accounts in a short time frame, it may actually lower your credit score. Build your credit history slowly and steadily. It could look like you are acting in a financially irresponsible manner if you apply for several credit accounts at once.

It will take time to raise your credit score, but it can be done. As you work to build a responsible financial history, remember to check your credit score regularly so that you can spot any mistakes as they occur and immediately take the proper steps to fix them.

If you are a person who has bills or a bank account, there is a three digit number that is used by a lot of people and business to define your financial responsibility. Most of us call it a credit score, but it is also known as a FICO score, credit rating, credit risk rating, credit risk score, and FICO rating. It is used as an indicator of how likely it is that you will pay your bills.

You may be surprised to learn that your credit score is important in situations other than when you are looking to open a new credit card account or looking for approval for a loan. It may be the tipping point on whether or not your application to rent a home is approved or not. It is included on the background check that most employers run on new employees.

There are a lot of people who can learn your credit score. If a legitimate business wants to see it, they can check it and see what your present financial situation is, as well as find out your history of credit payments.

What a Credit Score Means

Credit scores usually will fall between 300 and 850. The higher it is the better. In fact, a really good credit score could mean that you will get a better interest rate when you are approved for that new line of credit. It means that you are considered very likely to repay your loans on time. Credit scores that are over 720 are considered to be good. If you score in the 600 range or below, you may find that you will run into problems.

The actual numbers of your credit score do not mean the same things to all people. Some take other factors that appear on your credit report into consideration along with the score. Your credit score may be low, but the recent history that is shown on the report may show that you are working to improve your credit and have overcome past difficulties. This may mean that even with a low credit rating that they will allow you credit.

You may actually have a number of credit scores, depending on the credit bureau that calculated your data. Most of them use the FICO system to calculate the scores, but some have different methods of calculating the information on your credit report.

Many people are surprised to learn that the amount of money that they make does not have anything to do with their credit scores. Neither does age nor gender. What does affect the score is length of credit, unpaid accounts, types of credit, debts and recent account activity. The exact formulas used by different credit bureaus to come up the credit ranking are a secret.

Improving Your Score

You can boost your credit score if it is low. The best way to do it is to try to identify where the problem is that is causing the low number. Often your rating is low because you do not have a long credit history. This is often the case with younger consumers and those who try to pay for most purchases with cash. If this is the case, try to secure lines of credit that will prove that you pay your bills on time.

On the other hand, you may have too much debt. If you have too many unpaid bills, consider paying off some of them, but do not close the accounts. If you fall behind on your payments or consistently pay late, this will have been reported to a credit bureau and will cause your score to be low. Work to change the pattern to bring your credit score up.

Bankruptcy, loan defaults, and a failure to pay your taxes also will be a negative factor, and will be harder to overcome when you are trying to improve your credit risk rating. Often the advice of a credit counselor will be needed to help you bring your scores up when you have faced any type of major financial upset.

Divorce is never a pretty subject, but it’s even uglier when it comes to your credit. What happens to your credit in a divorce situation?

In the credit world, there are two different types of accounts; namely, individual and joint.

Individual accounts are accounts in which one party is solely responsible, regardless of marital status. It also appears on the credit report of the responsible individual. If you live in a community property state, such as Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin, both partners may be responsible for the debt, and the debt may appear on both partners credit reports. Individual accounts can be advantageous because your spouse’s debt need not be considered on loan applications, such as a mortgage. This is especially advantageous when one spouse makes enough money to qualify for a loan. The other spouse’s obligations normally will not count against your debt ratio.

However, the converse can be disadvantageous if you’re the spouse without the money. You will need your spouse’s income to be considered for an application. Along with the income will be your spouse’s own obligations, and if he or she has delinquent accounts, it will also be considered.

Joint accounts are accounts where more than one party is responsible for its repayment. Joint accounts don’t necessarily have to be between spouses. It can be between other family members, business associates, or any two parties who co-sign a credit application. Regardless, joint accounts can be advantageous in that both spouses incomes will jointly be considered for a loan application.

How are these accounts affected when you go through a divorce? When you have a joint debt, divorce does not wipe it out. The first thing to keep in mind is that joint debts stay joint debts. When you took out a joint account with your ex-spouse, both of you signed a legally binding contract with your creditors. The divorce decree does not nullify that contract, nor amends it. For a contract to be amended, it requires a signed agreement among all parties involved, including both spouses and the creditor. Unfortunately, creditors do not take part in divorce courts, so the original contract stays in effect. Normally, a divorce decree will spell out which spouse gets which debt. In a joint account situation, however, the debt will show up on both credit reports, just like you were married. Regardless of how your obligations are divided, the payment history remains on both reports. Therefore, if your ex-spouse is delinquent on his or her account, it will show as delinquent on your account, and will hurt your credit.

Divorce can take a tremendous financial toll on both parties. Sometimes, the financial hit is so devastating that one of the parties files for bankruptcy. When this happens, the spouse that didn’t file for bankruptcy is unaware of the filing. It can be months, even years, before they’ve caught wind of the situation, often too late for any sort of corrective action to take place. The non-filing spouse can be sued by the creditor legally for repayment of the debt. The non-filing spouse will also have a bankruptcy on his or her record. Unfairly so, but legally correct.

Individual accounts, on the other hand, will not usually factor in to a divorce, as the originating spouse is still responsible for the debt. If you are considering divorce, you should also consider the ramifications of your credit and accounts. Pay attention to what your financial situation might be after the divorce is finalized. You may wish to consider closing a joint account and re-opening credit in your own name. If your accounts are not joint accounts, but your spouse is listed as an authorized user, remove him or her from the account. The opposite also applies if you are an authorized user on your spouse’s account, have yourself removed as such. If you have a mortgage, you might wish to refinance into one person’s name.

Joint mortgages can be especially hurtful to your credit if you’re not the one paying it. If you’re headed for divorce, make sure your own credit report is in order. Keep an eye on your scores, as it may drop after the divorce is final. By doing so, you minimize any potential damage to your future finances and can bounce back quickly once your life gets back to normal.

Most people do not understand or even know that their credit score affects their insurance rates. You can take two people with the same age, driving records, neighborhood, cars and family members and each one could have a different insurance rate. The reason would be the FICO score. Insurance companies use the FICO score as a way to determine your rates through their own systems of scoring. Your neighbor with the exact same conditions could have a higher FICO score because of good credit, while your score is lower because of less than perfect credit.

You credit score determines your buying power as well as your allowed interest rates. If you want to buy a house and you have a low FICO score, you will fall into a higher interest rate than someone that has a higher FICO score. The credit score has more to do with your expenditures than what you would think. That is why it is important that you keep your credit history perfect.

The credit score affects your future job opportunities. Employers have the right to check credit reports and determine if you are right for a position, you are applying for with that company. This is especially true if the job requires that you be bonded. Bank tellers, investment brokers and even some domestic workers need to have a credit check for employment. Route drivers for newspapers need to be bonded if they collect money from carriers or drop boxes. This is something that you would never expect to hear.

If you need to see your credit score before considering a loan or insurance, you can request it online or in the mail by contacting the credit reporting agencies. You will want to keep track of your payments history and your credit score regularity for any incorrect information