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Credit Score

Understanding the Factors that Affect Your Credit Score

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credit score basics

What factors affect your credit score?

If you are going to improve your credit score, then logic has it that you must understand what your credit score is and how it works. Without this information, you won’t be able to very effectively improve your score because you won’t understand how the things you
do in daily life affect your score.

If you don’t understand how your credit works, you will also be at the mercy of any company that tries to tell you how you can improve your score – on their terms and at their price.

In general, your score is a number that lets lenders know how much of a credit risk you are. It’s a number, usually between 300 and 850, that lets lenders know how well you are paying off your debts and how much of a credit risk you are.

In general, the higher your score, the better credit risk you make and the more likely you are to be given credit at great rates. Scores in the low 600s and below will often give you trouble in finding credit, while scores of 720 and above will generally give you the best interest rates out there. However, scores are a lot like GPAs or SAT scores from college days – while they give others a quick snapshot of how you are doing, they are interpreted by people in different ways. Some lenders put more emphasis on scores than others.

Some lenders will work with you if you have the scores in the 600s, while others offer their best rates only to those creditors with very high scores indeed. Some lenders will look at your entire credit report while others will accept or reject your loan application based solely on your score.

The score is based on your credit report, which contains a history of your past debts and repayments. Credit bureaus use computers and mathematical calculations to arrive at a score from the information contained in your credit report.

Each credit bureau uses different methods to do this (which is why you will have different scores with different companies) but most credit bureaus use the FICO system. FICO is an acronym for the score calculating software offered by Fair Isaac Corporation company.

credit score

This is by far the most used software since the Fair Isaac Corporation developed the score model used by many in the financial industry and is still considered one of the leaders in the field.

In fact, scores are sometimes called FICO scores or FICO ratings, although it is important to understand that your score may be tabulated using different software.

One other thing you may want to understand about the software and mathematics that goes into your credit is the fact that the math used by the software is based on research and comparative mathematics. This is an important and simple concept that can help you understand how to boost your credit. In simple terms, what this means is that your credit is in a way calculated on the same principles as your insurance premiums.

Your insurance company likely asks you questions about your health, your lifestyle choices (such as whether you are a smoker) because these bits of information can tell the insurance company how much of a risk you are and how likely you are to make large claims later on. This is based on research.

Studies have shown, for example, that smokers tend to be more prone to serious illnesses and so require more medical attention. If you are a smoker, you may face higher insurance premiums because of this.

Similarly, credit bureaus and lenders often look at general patterns. Since people with too many debts tend not to have great rates of repayment, your credit may suffer if you have too many debts, for example. Understanding this can help you in two ways:

1) It will let you see that your credit is not a personal reflection of how “good” or “bad” you are with money. Rather, it is a reflection of how well lenders and companies think you will repay your bills – based on information gathered from studying other
people.

2) It will let you see that if you want to improve your credit, you need to work on becoming the sort of debtor that studies have shown tends to repay their bills. You do not have to work hard to reinvent yourself financially and you do not have to start making much more money. You just need to be a reliable lender. This realization alone should help make credit repair far less stressful!

Credit reports are put together by credit bureaus, which use information from client companies. It works like this: credit bureaus have clients – such as credit card companies and utility companies, to name just two – who provide them with information.

Once a file is begun on you (i.e. once you open a bank account or have bills to pay) then information about you is stored on the record. If you are late paying a bill, the clients call the credit bureaus and note this. Any unpaid bills, overdue bills, or other problems with credit count as “dings” on your credit report and affect your score.

Information such as what type of debt you have, how much debt you have, how regularly you pay your bills on time, and your credit accounts are all information that is used to calculate your credit.

Your age, sex, and income do not count towards your credit score. The actual formula used by credit bureaus to calculate credit scores is a well-kept secret, but it is known that recent account activity, debts, length of credit, unpaid accounts, and types of credit are
among the things that count the most in tabulating credit from a credit report.

Credit Score

What is Experian’s Credit Boost?-An Overview

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What is Experian Boost and how does it work?

Credit scores below 650 are one of the most significant financial burdens you will face in your lifetime. Poor, or even fair, credit scores may disqualify you from qualifying for certain types of credit accounts or loans, depending on your situation. This may also result in higher rates of interest being charged. This means that if your credit score improves, you will be eligible for better interest rates and loan terms in the future as well.

So, how do you plan on improving your credit score in the future? Experian’s Credit Boost, also known as Experian Boost, is a new service that will be able to assist you in accomplishing exactly that.

Experian is one of the three major credit bureaus operating in the United States. They collect information on people from a variety of sources, including mortgage lenders, credit card companies, banks, and other financial institutions, as well as from public records and collection agencies.

In addition, the company issues credit reports, which contain information about a consumer’s delinquencies, credit accounts, and other items such as bankruptcies throughout their credit history. This will also provide consumers with a credit score, which is calculated using a proprietary formula that is specific to them. Experian is currently offering a brand new program dubbed Experian Boost, which is intended to assist people in improving their credit rating.

There have already been some positive outcomes reported as a result of the program’s implementation. According to Experian’s reports, users of Experian Boost have seen an average increase of 13 points in their FICO credit score since signing up.

Since the launch of Experian Boost, approximately 60% of its users have noticed an improvement in their credit scores. You must keep in mind, however, that results may differ from person to person. Some users did not notice any changes in their scores or their chances of getting approved, and this was due to technical difficulties. Some lenders do not use Experian credit files at all, and others do not use the scores that have been affected by Experian Boost, which is another issue.

Experian Boost – How Does It Function?

For you to be able to take advantage of this free program, you must first create an Experian Boost account. You should keep in mind that this is a separate account from your Experian account. When you sign up, you will be asked to create your own profile and to provide Experian with some personal information about yourself.

You will need to link the bank accounts that you use to pay your utility bills to the program once you have completed the registration process and have obtained your own account. If you want your utility bill payments to have a positive impact on your credit score, you must link the bank accounts that you use to pay them to the program.

Your payment history will then be transmitted by Boost to Experian, which will then use it to calculate your credit score as part of the calculation. These payments will appear on your credit report alongside the rest of the open accounts and credit lines that you currently have in place.

In particular, one feature of Boost that appeals to me is that it only reports the payment history of your bank account that has been positive. If you didn’t make your phone bill payment last year, it won’t be reported. It is this that distinguishes it from the traditional methods of calculating credit scores.

Experian Boost will almost certainly be able to work in your favor when it comes to improving your credit score because it will only show positive payments on your reports.

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Credit Score

Why Do Employers Check Employees’ Credit? What Do They Look For?

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employers check employee credit

Employers today evaluate applicants based on their previous work experience, skills, and attitude. Depending on the information contained in the candidate’s resume and the information obtained during the interview, employers can make hiring decisions in a variety of positions. However, there are some instances in which your credit score is also important in your job search process.

While potential employers cannot check your credit score in its entirety, they can obtain a copy of your credit report and use it to assess your judgment and determine whether or not you pose a financial risk to the company. Interviews are already stressful situations, so being aware of what potential employers can and cannot find out about you through a credit check can alleviate one of your concerns significantly.

Is it possible for an employer to see your credit score?

During a job application, prospective employers will not be able to see your three-digit credit score. However, they can still view a version of their credit report that differs from the version that potential lenders can view. What they can look at is a modified report that does not contain information such as your account numbers, date of birth, information about your spouse, or other information that could be used to violate the laws governing equal employment opportunities.

In light of the fact that the purpose of your credit score is to demonstrate to a lender whether or not you are creditworthy, it is unlikely that potential employers will consider it when making hiring decisions. Therefore, it is not included in the report and is not visible to them.

What information can employers access from your credit report?

Personal information such as your name, Social Security number, and address will be included in the modified credit report that is made available to potential employers only. This will include information about your incurred debt, such as credit card debt, mortgage debt, student loan debt, and your payment history for each of these types of obligations.

If this is the case, why would potential employers be interested in obtaining access to your credit report? Employers may take this action for a variety of reasons. It is possible that a credit report will reveal a lack of financial responsibility if money management is part of the job. This could also indicate financial distress, which could increase the likelihood of theft or fraud.

Employers can reduce the risks associated with the hiring process by checking off prospective employees who have some red flags on their credit reports. For example, if the applicant’s credit report shows a pattern of late payments or something more serious, employers may interpret this as an indication that the applicant lacks adequate organizational skills.

Before running a person’s credit report, it is mandatory for employers to obtain the applicant’s permission first. If an applicant is not hired as a result of the information contained in his or her credit report, the employer isIn

In conclusion

Essentially, a credit report can assist potential employers in determining how responsible and trustworthy you are as a potential employee. It is especially useful if you are applying for a position in which you will be responsible for managing financial information or working with sensitive customer data.

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Personal Credit Scores & Business Loans

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Will Your Personal Credit Score Affect Your Business Loan Application?

Congratulations! You’ve decided to begin the process of applying for a small business loan. This is an exciting time for your new or existing company and could forecast many great things.

If this is your first time applying for a business loan, you might not be aware of the potential barriers that can get in your way. After all, receiving a business loan for your start-up or expansion can be competitive, and banks want to ensure that they trust only the best with their investments. Before you jump all in, you’ll want to have a clear understanding of the things that could qualify or even disqualify you from receiving funding.

Business Credit

One of these factors is your personal credit score.

If you are a small business owner in the United States, the three credit bureaus track two profiles: your personal financial history and your business credit history. Each profile plays a vital role in getting approved for a business loan. However, if your starting a new business or your existing business doesn’t have established business credit, the lender may rely more heavily on your personal creditworthiness when making their lending decision.

While your personal credit score and business credit profile express different information about you and your business, both have a substantial impact on the options available to your business and your ability to qualify for a loan.

Why Lenders Care About Your Personal Credit Score

Some business owners don’t think that their personal credit score has much of an impact when it comes to their organization. This just isn’t the case. A potential creditor is going to consider your personal credit score when making a decision to grant your company a business loan.

In general, a potential lender is going to view your credit score to determine if you:

  • Have the ability to repay the loan?
  • Are going to repay the loan?
  • Will pay the loan even if something unexpected happens?

Lenders see your credit score as an insight into your financial health and responsibility. Unfortunately, if a lender sees that you are not able to manage your personal finances, they may assume that you are a high risk for managing business finances as well. This is especially true if you are a new business owner. Without an established business history or credit to your company’s name, the only way the lender will be able to determine creditworthiness is by accessing your personal credit score.

How is my credit score calculated?

Three primary credit bureaus generate a credit score for lenders to access. Each reporting agency uses the same basic FICO formula to score the information that they collect. They also obtain personal information such as full legal name, date of birth, employment history, address, etc. They also list a summary of information that was provided to them by your creditors. Other information found in public records like bankruptcy or judgments are also included on your credit report and factored into your score. Each time that you apply for credit is also recorded on your report.

There are primary differences in the way that the three credit bureaus review and calculate your personal credit history. For example, Transunion holds more detail about your employment information, Equifax separates your accounts that are open and closed, and Experian will record data like whether or not you are paying your rent and other bills on time. Essentially, these agencies are competitors, and lenders may choose to report to one bureau and not the other. While their data might include different results, their score is typically similar.

Importance of a Good Credit Score For Your Business

While you may not feel that your personal credit history is the best representation of how you will meet and exceed your business’s financial obligations, the need to establish and maintain a positive credit score is vital for every small business owner. Most banks and lenders take a close look at your credit score when they evaluate your worthiness as a business borrower and even consider the score in their decision-making process – regardless of how long your business has been operating.

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