For all who live in the United States is vital to maintain your credit score, as this will facilitate many things like buying a car, buying a house, freeing down or deposits when renting or buying a good, among other things.
These are just some of the advantages of having good credit.
But, what happens if your credit was affected by some debt that you did not pay on time?
- How to increase your credit score
- What is the credit or credit score?
- Who calculates the credit score?
- What is FICO?
- What do these credit bureaures measure?
- What number is a good credit score
- How to increase and maintain my credit score
- What are collecting agencies
- What to do if something comes out that is not yours
- Where to get my credit report
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How to increase your credit score
Or a car that the dealer took away from you?
Or a debt that is not yours and comes out in your report?
What is the credit or credit score?
The credit score is a number calculated based on different factors.
It is unique to each person and goes hand in hand with your social security number.
When you are going to ask for a credit in any company, the first thing they ask you is your social security number, this is to verify your credit.
The information generated by that credit score details how many debts you have, what amount you add to those debts, if you pay your debts on time, among other things.
This is why it is important to maintain our credit score.
Who calculates the credit score?
There are three credit bureaus that measure the credit score of each person according to certain criteria, which are TransUnion, Equifax and Experian.
The credit companies are responsible for reporting to these bureaus in order to keep the credit score of each person updated.
For example, if you approve a credit to buy a car, the financial institution that approves the credit will report to each of these bureaus the opening of your new credit.
Also, each time you make a payment to this credit, the financial institution will report your payment, on time or not, and how much your debt decreased.
The same happens with credit cards, banks notify credit bureaus when they approve a credit card, as well as the amount you owe and payments made.
This information will build your credit score.
TransUnion could be said to be one of the most updated since it is the one that receives the most reports from credit institutions, however when they check your credit score they check the three bureaus.
What is FICO?
FICO is a company that is responsible for measuring the credit risk that a consumer has.
It is a score that predicts the chances of a person paying a loan on time.
The FICO company was the first to develop a method to calculate the credit score or credit scores, but the most used by banks is FICO.
The FICO score may be different from that presented in the three credit bureaus mentioned above because the parameters used to measure are different.
What do these credit bureaures measure?
All bureaus do not use the same measurement parameters or the same calculation formula.
They are generally based on the information that the creditors report to each company.
What they measure mainly is:
- How many credit accounts do you have open?
- How long have you had these accounts.
- How close you are to your credit limit.
- What percentage of credit you have left?
- Punctuality in payments.
- Antiquity of your credit score.
What number is a good credit score
The credit score can range from 300 to 850 points.
- Between 300 and 599 very bad
- Between 600 and 649 poor
- Between 650 and 699 fair
- Between 700 and 749 Good
- Between 750 and 799 Very good
- Between 800 and 850 Excellent
How to increase and maintain my credit score
Increase and maintain your credit score can only be achieved by doing things right, correctly.
Some recommendations to raise your credit score are:
- Pay on time. This is the most important point of all. If you pay your bills on time you will add many points to your credit score.
- Do not close the cycle of the credit card with more than 30% of your credit limit. In other words, do not use your entire credit limit, keep it below 30%
- Be careful when closing accounts. There are credit cards that offer you to bring all your debts to a single account, this can hurt you because you will be using a high percentage of your credit limit.
- Do not apply for credits you do not need. If you apply for a large amount of credits in the short term, it can be seen that your economic conditions have not improved.
- The longer you have your credit the better. This will give more history to your way of handling your credit.
What are collecting agencies
When you do not pay a debt on time, the financial institutions pass this debt to the collection agencies who are responsible for collecting the money and leaving a large mark on the credit score.
This not only applies to vehicle or home loans, but also to small debts such as an electricity bill that, if not paid, goes to the collection agency and the credit score.
This is why it is important to have the accounts paid up to date, and if they can not be paid then make a payment agreement to avoid your score being affected.
What to do if something comes out that is not yours
If any of the credit bureaus reports a debt that is not yours, you must open a claim.
When the credit report is received, it must be verified that all the information reflected there is correct.
From the name, telephone number or address to the balances on credit cards.
Everything that is reflected there must be correct.
Accounts that have been closed must appear closed.
This is why, if a credit report is received with information that is not correct, a claim must be opened immediately before the company that is issuing the report and before the credit bureau that presents the error.
Where to get my credit report
Visit annualcreditreport.com or call 877-322-8228 to get a free credit report once every 12 months.
This report will indicate the credit information contained in the three major credit or credit bureaus.