How To Use The Credit Score Companies Advantageously

Credit score companies collect information which is given to them by any lender which you have to pay monthly, or for which you have some other kind of credit agreement. They are the reference agencies to which every transaction is reported and to which lenders refer when they need to form an overview of whether or not someone is likely to be able to pay back borrowed money. These credit profiles are a controversial issue, in fact one banking group has ceased using them altogether, but they are still used by the vast majority of the banking industry.

The credit scoring system has been condemned by many consumer activists as being unfair, but it is a system which you can use to your advantage if you are trying to improve your score so you can obtain credit. The first step is to understand how the different sectors of the chart work in forming an overall picture of someone's credit history. The most important sectors relate to the repayment of bills and the way your existing credit is utilized. There are other sectors which measure the different types of credit you use and the length of time each account has been open for.

Each time you have a repayment to make to a lender this fact is recorded on the credit file. The record shows whether the payment was made on time, whether it was late, or whether you simply didn't make it and the account fell into default. Any lender which you approach in the future will have the right to examine this file and see the score before they make a lending choice. You also have the right to see the information which is stored on the file, and this can be done for free with each agency once in every twelve month period.

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Using the credit score companies to your advantage is something which everyone can do provided there are no serious black marks on the file. If there are, the only way to get rid of them is to wait for the time period needed for them to drop off the file naturally. This will take seven years in most cases, but a bankruptcy will stay on file for ten years. Until this drops off in due course, there will be little you can do to try to build up a healthy credit profile.

If you have no extremely serious problems such as a bankruptcy you should be able to slowly build your rating into something more desirable. You need to make sure that all bills and repayments are paid on time, and that there is never any cause for a creditor to leave a bad mark. To improve your rating still further, you will need to be able to borrow more money. If you can only qualify for the high interest credit cards issued to people with average ratings, get one of these anyway.

When you pay the balance off every month you will be creating a repayments profile with the credit score companies, and you will be doing so in a way which avoids the high interest rates. If you can maintain this for a period of months or even years, you should receive a credit limit rise which will immediately have a positive effect on another sector of the score. These improvements will have another knock on effect in that they will make it possible for you to get other forms of credit, and this will increase your score still further. It takes time, but you can build up a healthy profile with the credit score companies.

 

 

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