Debt Consolidation Loans Can Improve Your Credit Score
Are you looking to Get A Better Credit Score? Do you want to know how to increase your FICO score? If so, then this article is for you. We will discuss why it is important to monitor your credit, as well as how to improve your credit. After reading this article, you should have a better understanding of what a good and bad credit score means. Now go out there and start boosting your credit!
First, let us start by examining the nature of the different types of credit scores. A credit score can be broken down into two types: FICO vantagescore, and TRW. The FICO vantagescore is based on several factors. These include a person's employment status, the amount of debt that they have, any outstanding loans, any outstanding mortgages, any collection activity, and even the number of credit cards that a person has. A FICO vantagescore will show a persons overall credit rating, which are not only based on these factors, but also on several others as well.
The next thing to note about credit ratios is that it involves both debt-to-available credit, and available credit. A debt-to-available-credit ratio, or DV ratio, is a calculation that determines how much of a person's available credit is actually being used to pay off debts. For example, let us assume that Bob has a credit card limit of $1000. Now, Bob owes several thousand dollars in various debts. Bob's available credit is thus, decreased by the total amount of debt that Bob owes. His score would then be 500.
How can this be bad? Well, it might think that Bob's score is not high enough to qualify for good terms at the store, or for a good interest rate, or for an unsecured loan. He might think that this means that he will not be able to get a better credit score or that he cannot get an unsecured loan because his credit report does not show a healthy history of credit payments. Perhaps this might also mean that he cannot get a mortgage or car loan. These are all things to consider.
But these things are just possibilities. They are not real. Just because a person has a low VICO score, does not mean that he cannot raise credit score and move into the positive. It is possible to raise credit scores with little effort. And we are talking about a relatively small change in one's financial behavior, such as paying a few more bills every month, paying down some smaller debts, or getting rid of some large debt.
The first step would be to get a copy of your credit report. Order it from all three of the major credit bureaus - Experian, Equifax, and Trans Union. Order it from the credit report agency that is giving you the lowest credit score that you qualify for. If you have had late payments on any debts that you owe, or debts that you cannot currently verify, then you should order those debts as well.
Once you have ordered your report, review it. Look for errors or mistakes, as well as inconsistencies with your current financial information. Pay special attention to the debt utilization ratio on your credit report, especially if it is very low, as this could be a sign that you are not maximizing available credit. The debt utilization ratio is the amount of available credit used to pay down the debt owed. If this ratio is too low, then lenders are seeing you as high risk.
To fix this, you need to order another copy of your credit report, this time with a good credit repair company. Have the credit repair specialist examine your report, using a proven methodology to determine the level of available credit that you are actually using. You may find that there are errors, or at least parts of an error. Then the credit repair specialist can go over those errors with you, as well as the consistency in which they appear. Fixing these errors, or even just making sure they are consistent, will raise your overall credit score significantly.
