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Experts Advise On Credit Score Management

By Brian Anderson
Published: Saturday, August 14th, 2010

14Credit scores are the primary basis for most lenders for granting loans to loan applicants. These scores are contained in a 3 digit number that ranges from 300 – 850 (for FICO scores) and 500 – 900 (Vintage Score). These scores indicate the card holders’ attitude in handling debts. The higher the score, the more trustworthy the debtor is. Many cardholders grow so critical in their actions that they would always ask experts what harm they could do to their own credit score if they do this and that.

There are common advisories that many experts all over the web provide for those who want an improved credit score.

“Be punctual in paying your bills.” It has been proven that paying bills on time reflects how prompt and responsible the debtor is when paying his or her debts. This will make future lenders confident of having a very, very low default risk.

Check your credit report.” AnnualCreditReport.com, by law, provides credit card holders annual free credit reports. Users must be quick when spotting errors by reporting them immediately to those who are concerned. Even credit reports are susceptible for identity thefts.

“Paying off debt” – More debts still cause lowers credit score. A debtor with plenty of debts even if he or she pays each bill monthly by the minimum will still cause a low credit score. Paying off these debts will reduce the utilization rate, which in effect increase the credit score.

“Credit Counseling” – When the credit cardholder obtains a very low credit score, he or she may resort to credit counseling and seek for an advice that would tell them certain methods to improve their score.

“Don’t close account.” Utilization rate is a great factor used in computing the credit scores. It is determined by dividing the actual credit amount with the available credit limit. It simply means: how much was used from the amount the debtor was allowed to borrow? Lowering the utilization rate, lowers the credit score. If the debtor holds three credit cards and is not using one of them closing that card, will increase the utilization rate, thus pushing the score to the negative direction.

Some credit card holders feel relieved if their scores are a little over the median score. This should not always be the case. Holders must continue to improve their scores as it will provide them better paying arrangements. The higher the scores, the higher the loan but with lesser interest rate. Those who are in the low score range must establish an improved credit score by reducing their bills and doing credit counseling. In the long run, with effort and persistence, low score debtors will scale up to be among the top scorers.

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