Credit scores and credit reports
The credit reports are made on the basis of the payment history of debtors. Various other aspects are included in the same like the type of loan taken, number of loans, default payments and other similar details. The credit reports include all these details. But the credit scores are numbers which range from 300 to 850. These scores are computed on the basis of the credit reports and then calculated and processed through software. Good credit reports and scores are vital for financial gains and getting employment.
Six costly mistakes that hamper your credit scores
- Co-signing loans with friends and family
Co-signing loans with friends and family members can help someone out but it reflects badly on your credit scores. The non payments or defaults of the loan partners will also show on your credit report. Since you have co-signed to loans you are also liable for these non payments and hence your credit scores are also affected.
- Closing older credit card accounts
If your older accounts have good credit rating or standing then it is suggested not to close them. Closing the accounts with good revolving credits also results in a drop of the credit scores. The credit limit on these accounts helped to get good credit scores.
- Not checking your credit reports
By not checking your credit scores and credit reports you are eliminating the chances of errors on your reports. These errors or misinformation on your credit reports can be the fault of the credit reporting agencies or creditors also. Checking these reports can help you to improve your credit scores.
- Credit cards with high balances
All the high balance credit card accounts reflect poorly on your credit scores. As per the FICO suggestions the balance on the credit score should not be more than 30% of the total credit limit. The lower the balances on these accounts the higher are the scores.
- Frivolous spending habits
If your spending habits are not controlled then the chances of your credit scores improving are impossible. Those with poor credit rating should avoid spending more but focus on saving so that debts can be cleared and credit scores improved.
- Refinancing debt consolidation loans
Most debtors have to refinance their debt consolidation loans in the last stages of debt clearance. This results in higher interest loans and very poor credit scores due to non payment of multiple debts.
Other Credit Report Related Articles
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- Sample / Example Credit Bureau Dispute Letter
- Do-It-Yourself Free Credit Report: Beginner's Guide
- Accessing your free credit score
- Credit Repair: How to approach the credit bureaus
- Your Credit Report and Score: Six Costly Mistakes
- Ways a free credit report can help you
- How to get your free credit score and check your credit
- What does your credit report score mean?
- Misconceptions of Your Credit Beacon/ FICO Score
- Quickest and Easiest Way To Get Your Credit Score
- Forgotten Secrets of Credit Repair and Repairing your Credit