Know Your Credit Scores To Get Better Success Ratings In Debt Consolidation

Your credit life and score

Your score will have a direct impact on your creditworthiness as well as your credit life. Remember that if you are ever denied credit the only strong and valid reason for such denial can be your low credit score.

You will have to then work hard to improve your credit score and then apply for a loan to be sure that it is not rejected by the creditors this time. Now the question is how you improve your credit score being already in a situation wherein your existing debts are creating a lot of problems to your finance management and its health.

Well, to start with you must know that you are not alone to be facing such a situation in the world. According to a study report of Prosperity Now there are currently 56% of consumers that have subprime credit scores that leads to the higher credit risk for the money lenders. Therefore, what is the fuss all about?

The credit score

Your credit score is the most significant tool that will determine your loan eligibility and repaying capacity which will in turn enable the credit counseling agency to compare and determine the best debt consolidation ratings for you so that you get the relief as desired.

The features and usefulness of your credit score include:

It is actually a number
It is calculated by using different information found in your credit report
It helps the lenders to assess the level of risk in making a loan to you
It also helps in calculating the interest rate they will charge from you if they agree to lend you the money
It is inversely proportional meaning applicants for a loan with highest credit scores will get the best and often the lowest interest rates.

Most lenders usually use your credit score rather than your credit reports because it allows them to know everything about your financial history through this single number instead of having to go through the extensive and detailed information in your credit report thereby reducing their work and speed up the lending process and fulfill the purpose.

Different scoring models

However, there is a catch here and is quite tricky as well. All money lenders will not use the same credit score. Different money lenders will use different scoring model to calculate a “good score.” Just like most of the consumers you may also be familiar with the standard and most commonly used FICO score but there is another competent credit scoring system called the VantageScore, which is also developed by the three major credit bureaus.

Both these credit scoring models however emphasize on paying your bills on time as well as retaining a favorable credit capacity. This capacity is the amount of credit you use in relation to the limit of your credit.

Both these two systems will give different weights to your specific styles of credit-related behavior. Therefore, it is necessary to know what is in your credit score that helps the lenders to determine your loan eligibility. Remember, your score may change over time based on what it reflects. The most common factors that the lenders analyze with the help of your credit score are:

How much credit you have used in comparison to your available credit limit
How frequently you apply for a new credit
How long you have used your credit
What types of loan accounts you have
What is the number of loan accounts you have at the time of application
How have you handled your credit approved in the past and
Are there any legal proceedings against your credit?

If the lender finds the answers to these questions to be satisfactory then you will be granted the loan to consolidate your other debts. Or else, you will for the time being you will have to put together a strategic and well-crafted finance plan immediately so that you can strengthen your credit history soon. This will enable you to secure a credit in the future.

Who can access

Since financial data is confidential, it is also important for you to know who all can access your credit score. This is important because once anyone accesses it including you then your borrowing habits as well as your reputation on repaying your debts will no more be a secret.

Why? It is because your credit report is a detailed record of how you deal with your debts and paid it off over time.

Typically, your credit report can be accessed by the following people according to the laws:

Any credit lender provided you have applied for a credit
The collection agencies if your loan account has come to them for collecting
Your insurance company as well for their underwriting purposes
Your employer only after you have given a written permission
Your potential landlord but once again with your permission granted and
Any, other entities provided they have a reasonable as well as a permissible purpose as stated on the Fair Credit Reporting Act.

Therefore, to make sure that people get the true picture of your creditworthiness you must review your credit report from time to time which you are entitled to do so and for free. Primarily, you should look for any errors and omissions in it and report the Bureau for immediate correction, if any. Make sure that you space your review of each report of each credit bureau after every four months as you are allowed to get it only once in a year.

Thank you,

Glenda, Charlie and David Cates