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Credit Report News, Tips & Advice « Credit Reports > Credit Report Tips > Why there is a Need for Consumers to Have Good Credit Scores

Why there is a Need for Consumers to Have Good Credit Scores

By Karen Anderson
Published: Thursday, July 1st, 2010

Being granted of a credit card is more than luck. Inasmuch as this is a fortune in other words because not all consumers could have the chance to succeed in all their applications, approved credit opportunity is more of work. Consumers vary according to their credit worthiness which is greatly affected by their financial activities. Consumers are different according to how they pay their bills and how they could manage their credit cards without having to leave debts unsettled. Credit report tips abound online because more and more consumers find themselves irresponsible in settling their debts. They seek for advice when they already realize that their past commitments are hurting their future chances of a good life.

Good credit scores are essentials for good financial opportunities. Credit companies and other lenders highly depend on FICO scores in determining the credit worthiness of an individual. These numbers are powerful enough to dictate the quality of life a consumer is set to live in the next few years. Insurance companies, utilities and landlords, cellular phone providers and prospective employers are all determinants of your future and they depend solely on what the credit reports reveal about your credit management skills.

A FICO score is composed of data gathered by Equifax, Experian and TransUnion from merchants and lenders which are calculated based on the system adopted from the from the Fair Isaac Corp. These scores range from 300 to 850 where the former is set to be the lowest while the latter is considered the highest. There are five categories which the computation of the scores are anchored including the credit report tips which are formulated accordingly. The categories are length of credit history (15%), payment history (35%), new credit (10%), debt (30%) and credit used (10%).

With these categories in mind, consumers are given the idea on which aspect of their credit accounts need to be improved in order to earn ratings that are good. Once consumers apply for a new credit account, the credit companies look into the computed ratings and see if you have any chances of delinquency. If so, you will be denied of a credit approval. The higher are the scores, the more chances you have for being approved of a loan or a mortgage. This happens because the high ratings are reflective of how responsible you are to your debts.

Credit worthiness is the sole basis of a credit opportunity. The credit reports are recorded evaluation of your transactions in the past. What they show is what you are as a borrower and a consumer. This only means that running away from your debts will not help but will only injure your chances. Good credit scores can be achieved through following many of the credit report tips that you could opt for online. Good credit scores are only deserved by good consumers who pay for their debts and do not run away from them. Moreover, good ratings are building blocks of excellent financial opportunities in the future.

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