Getting out of debt and restoring credit rating

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Are you looking to restore credit rating scores to a more agreeable and positive level? More than likely you are but you are unsure about how to go about the process of bringing your credit rating to a level that would put you back on the road to financial health.

If you are not 100% sure about the process, here is some good news: it is not all that difficult to boost your chances of success. All you need to do is take a few simple steps that can effectively restore credit rating scores. Here is a look at some of those methods.

At the most basic of levels, you need to get an effective and proper handle on your budget. A lack of liquid cash often necessitates borrowing since that is the only means left to many to be able to purchase essential items.

And, by the way, when you are buried in debt you want to eliminate the purchase of non-essential items. Such purchases can drain a budget dramatically and unnecessarily. So, keep you budget in check when looking to restore credit rating scores. More borrowing (ie loans) will undermine such goals.

It is also wise to take whatever money you save and use it to pay down your debt. When you have high credit card balances, your credit rating will suffer as a result. Why put yourself in a position where you are stuck with such a problem? Pay down your debt and this will help restore credit rating scores.

It certainly would be helpful to avoid missing any monthly payments on your bills. Far too often, people will miss their monthly minimum payment and this yields a disaster scenario in terms of the cumulative negative impact it will have on a credit score.

Yes, sometimes we can al be forgetful and that is why it is best to sign up for monthly automatic payment deductions with all sources of bills and debts. Whether it is your cable company, credit card service, or utilities company, you can set up automatic monthly payments.

This way, you need not worry about missing payments since the deductions will be automatic. Just be sure your checking account either had enough money or comes with overdraft protection so as to avoid any problems.

If you are having problems figuring out methods that can be employed to increase your credit score, it might be a wise idea to look towards procuring the help of those professionals that do possess a solid understanding of what is needed to accomplish such goals.

There are viable and legitimate credit card debt counseling services that can aid in this regard. Seeking an appointment with such counselors is certainly recommended when solutions appear to be outside of your reach. Just be sure to stick with the most credibly or professionals since less than desirable services can lead you down a path that is more problematic than anything else.… Read more

About credit score algorithms and how to improve credit rating

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In order to start repairing your credit and improve rating, it is important to have a basic understanding of how your rating is calculated. This in turn will help you understand what you are supposed to do and why.

While different agencies have different reporting systems, FICO is the industry standard and one which most lenders use.

Your credit score, also known as credit rating, is a number between 300 and 850 that summarizes your risk of default. If is also referred to as a FICO score simply because Fair Isaac company developed it.

There is also the Vantage score offered by TransUninon and Experian agencies, but which is currently not the industry standard.

If you don’t know your credit rating, you will have to get one. And while you can get your reports at least once a year for free, your score does not come free. You can only get your FICO score from two companies, MyFico and Equifax.

How is Your Credit Rating Calculated?

More or less it works like a school progress report chart where different percentages are given for fixed category of work you have done; your score will count your standard finally with the total percentages you received.

Approximately 35% is counted according to the payment procedure you have paid back to the lenders. This means the amounts, dates, items in collections and how many late payments have been made etc. Paying on time is the key component here.

Next 30% goes for the debt compared to your limits; that is how much you owe compared to how much credit is open to you. In order to have a good score, you need to have used 30% or less of your total credit limit. This means that if you have $1000 limit, for example, you should keep your balance at $300 or less.

As you can see, it is possible to raise your credit score almost instantly by reducing your credit utilization, payday loans or raising your limit. This is assuming that you continue to or start making payments on time.

This time factor deals with only 15%. This means the length of time you have been using credit.

Another 10% deals with variety. A “healthy mix” of credit types is what is desired. For example, if most of your credit is in form of “revolving credit” such as credit cards, your score will most likely be lower than someone with a credit card, a car payment and a mortgage.

Last but not the least percentage deals with all the recent credits you are dealing with. This includes new credit cards and line increases requested by you. Too many new accounts are considered unhealthy.

Of course, the above are just basics to help understand the workings of the system.

Now, you can easily obtain a high limit merchandize credit card (up to $10,000) which can help improve your credit rating almost instantly, by raising your total available credit.… Read more