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Credit Card Myths: Getting Passed a Triple Threat

By George Hauser
Published: Tuesday, April 6th, 2010

The credit score of a person can be viewed as their passageway to getting granted for loans. Good credit scores will have chances of getting admitted for future loans while undesirable ones will be the least of priorities. A credit score makes use of the history of your account, the amount of credit that account has, the length of time for which credits have been made, and what loans does the person have already. Credit scores can be hurt in several ways and there are also different ways to avoid these from happening.

One of the ways to avoid damaging your credit score is clearing you of credit score myths. One is that a FICO score is just one of your worries for getting loans. This introduces the other companies that compute credit scores and you should all be updated with all the scores from these companies.

The truth is that the three companies Equifax, TransUnion, and Experian are different companies, but they all use the developed formula of Fair Isaac for computing credit scores and only differ in name. In Equifax, an FICO score is known as a Beacon credit score. At TransUnion, the counterpart of a FICO score would be called Empirica, and at Experian it is referred to as “Experian/Fair, Isaac Risk Model.”

This means that you have a set of three different credit sores coming from three different bureaus mostly because the three bureaus don’t share the same data. Also, the three bureaus are most likely to be different in choosing external factors that would allow you for a loan. One company might check on your income, your home, your current stance while others might give more importance to the amount of credit you have.

These differences will of course push you to get an update from all three bureaus about your credit score and how you can improve them. You would want to do this, especially when you’re applying for a big loan like mortgage. Many of the mortgage lenders will get the mean or the average of your score from all three bureaus before making a decision on whether you deserve a loan or not. So you should try to fix errors in all reports before the evaluation starts.

Above all these tips and suggestions on how to improve your credit score, it will all matter on you and the actions that you would take to meet the requirements of mortgage lenders. People should also keep in my mind that the most important things they have to follow in order to have a better credit score is by investigating and correcting errors in your account, paying your bills on time or making sure that your credit counselor does his job properly. Another is paying down your debt in your different accounts to create a minimum of a 30% gap between you credit and the limit. And the last is controlling the number of unpaid loans or having several loans simultaneously and apply for credit sparingly.

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