Credit -Ways to Improve

Everyone should order their credit report at least once a year to view the areas of change since the previous year. You should know that each major bureau; Transunion, Equifax and Experian offer you the option to do so. Free Credit Report.com will offer you a free credit report which does not include the credit score. There may be a fee for your credit score to be revealed to you. This is what happened when I ordered mine some time ago.

You should also be aware that each bureau may provide some different information. Why? This is because different lending agencies, car dealerships, loan companies and other places which pull your credit when you may have applied for credit; does not pull from the same bureau. All banks do not use the same reporting agency. This is why when you apply for a mortgage loan, a credit report from the three major bureaus listed above; called a tri-merged report is pulled. This gives the mortgage company a clearer view of all of your accounts, credit lines and your average score. On occasions two bureaus may have the same score but not that often. Having reviewed many credit reports while in lending, there have been times when one bureau may have a much higher score than another and that can be dependent upon what is report or not report to the bureau which has the lower score.

A factor can be that there may be a tax lien which has not been reported as paid in one bureau yet report on another. The scores will be different to some degree. Another factor is a lien may not have been released which has been paid on one but not the other. It is always good to identify any accounts which you may have had which presented credit issues and make sure they are cleared and shown on all three major bureaus. This can be done by calling them and requesting a copy of your report by mail.

This is one important way to Improve Your Credit Rating. Making sure that all major bureaus are reporting the same information. With that said, Transunion may not report all of the same accounts as Equifax or Experian but you should make sure should you have a negative issue that has been cleared from one report; that it is cleared from each of them, if it is reported to each one. This can happen often and it is not realized until the credit is pulled for say a mortgage application.

When a company reports to the bureau initially, it will give the date of the transaction, the high balance or the beginning balance, the number of months for the debt will also be given.  If it is an open account, revolving account, an installment account or a mortgage account.  Normally the credit lender will report on these accounts every two to three month periods, some may report monthly but with my experience, usually the accounts are not updated but every 90 days.

The lender will report if your payments have been paid in the month it was due.  If you go beyond 30 days, it will show a 1 x 30 delinquent payment even if you paid it on the 31st day of the month.  If you did not pay it within 60 days, your report will indicate a 1 x 60 and if not paid within 90 days you will have a 1 x 90 etc.

It is important to make sure the right information has been reported.  Credit bureaus have humans which take care of these reports and as we know humans make errors. 

 For anyone to have a good score it is determined that you have all account which have been paid within the period agreed upon.  Simply; no delinquency.  I have seen on a few occasions where a person may have had one account that had a problem, which had been cleared and it had not affected their credit rating.  A good score can range anywhere from 680 to 700.  I use the 680 because I have seen plenty of good credit reports without delinquency but considerable debt load.  If you have no delinquency and have a 680 score, it means that your score is determined by the type of account you have and the number of accounts as well as how you have paid your accounts. An excellent credit score will range from 700 to 800+.

Make sure you keep your current balances at about 25% of the high balance. Specifically this is on your revolving charges, you should not be borrowering up to the limit after you pay a payment each month.  In other words you should have available credit in access of you current balance.  This of course does not apply to installment loans as these are closed end loans.

Your accounts should usually be a mixture of installment, mortgage, and revolving, and open end.  They should not all be revolving account and on the same note; not all installment.  The ratings are based upon, the type of account, whether revolving, installment, finance company, mortgage, open end account etc.  You should not have excessive credit accounts which add up to a lot more than your monthly income can carry.  Excessive credit obligations had a determination of your credit analysis. 

It is very important to have a perfect rating on your mortgage loan also, if applicable.  Meaning no late payments period...never.