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What a High Score Card may Mean to Your Finances

By Andy Snyder
Published: Tuesday, November 10th, 2009

Do you need a loan, a mortgage or simply an increase to your credit limit? As a credit report advice, you should know and prepare the things that are needed to avoid having your application denied. Taking extra caution with regards to your financial activities will go along way when it comes to your loan application. But do you know the bases lending companies use to approve or deny your loan? Have you heard of the FICO scores or score cards? If not, then reading on will teach you a lot but if you already do, surely there are still some tips below that can be of help to you.

Credit companies get credit reports of potential borrowers from the big 3 (Experian, TransUnion and Equifax). These companies are responsible for doing researches on people’s financial activities. The credit companies then calculates the score card of the borrower according to the FICO calculator. Scores ranges from 200-900, depending on the financial activities of the person. And of course, with a high score card, the loan you have been waiting for, can be a handshake away. So as a credit report advice, let us get to know how they score you.

This is how your total score is calculated; a 35 percentage comes from your payment history. This is based on how you pay regularly pay your bills. Another 30% is added for the average of the amount that you owe. Examples are your mortgages, auto loans, and credit card bills. The next 15% is the time that you have had your credit card and other liabilities. Your last application for a credit or the last time you applied for a new account takes up 10% while another 10% is given to the types of credits you use. Studying these criteria is a good credit report advice.

Aside from the percentages of score cards as discussed above, a credit report advice will also remind you to be aware of what the lending companies’ term as severity of the “Hierarchy of Madness. This is about the severity of the delays in your payments. They use the ranks such as 30 days to be the lowest and 90 days to be the worst or what they term to be as “madness.” Well, credit report advice will tell you that if you don’t want your name in their “mad” list, better pay your bills on time.

Another credit report advice to consider is how FICO looks out for those with a healthy mix of credits. This means that there should be a balance between your outstanding balances and revolving debts (credit cards, installment loans, auto loans, and mortgages). Putting in mind all of these things is a surefire way to a stress-free loan application.

A credit report advice is just what it is – an advice. The decision belongs to you, whether you will follow it or not. Remember that it is always handy to have a good reputation, a clean financial record and a high score card.

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