How to Raise Your Credit Scores 25 to 100 Points in 48 Hours, Guaranteed!

Hav e y ou ev er wondered how a creditor decides whether to grant y ou credit? For y ears, creditors hav e been using credit scoring sy stems to determine if y oud be a good risk f or credit cards and auto loans. Creditors use credit scoring to ev aluate y our ability to repay home mortgage loans. Insurance companies ev en use credit scoring to determine y our insurance premium rates. Heres how credit scoring works in helping decide who gets credit

and why.
What is credit scoring? Inf ormation about y ou and y our credit experiences, such as y our bill-pay ing history, the number and ty pe of accounts y ou hav e, late pay ments, collection actions, outstanding debt, and the age of y our accounts, is collected f rom y our credit application and y our credit report. Using a statistical program, creditors compare this inf ormation to the credit perf ormance of consumers with similar prof iles nationwide. A credit scoring sy stem awards points f or each f actor that helps predict who is most likely to repay a debt. A total number of points the credit score helps predict how creditworthy y ou are, that is, how likely it is that y ou will repay a loan and make the pay ments when due. High credit scores qualif y f or the best interest rates. What can I do to improv e my score? Credit scoring models are complex and may v ary among creditors and f or dif f erent ty pes of credit, but generally rate the f ollowing inf ormation f rom y ou credit report:

Hav e y ou paid y our bills on time? If y ou hav e paid bills late, had an account

ref erred to collections, or declared bankruptcy, if that history is ref lected on y our credit report as negativ e inf ormation, lowering y our score.

What is y our outstanding debt? If the amount y ou owe is close to y our credit

limit, that is likely to hav e a negativ e ef f ect on y our score.

How long is y our credit history ? An insuf f icient credit history may hav e an

ef f ect on y our score, but that can be of f set by other f actors, such as timely pay ments and low balances.

Hav e y ou applied f or new credit recently ? If y ou hav e applied f or too many

new accounts recently that may negativ ely af f ect y our score. Howev er, inquiries by creditors who are monitoring y our account or looking at credit reports to make prescreened credit of f ers are not counted.

How many and what ty pes of credit accounts do y ou hav e? Although it is

generally good to hav e established credit accounts, too many credit card accounts may hav e a negativ e ef f ect on y our score. In addition, loans f rom f inance companies may negativ ely af f ect y our credit score. Other f actors may af f ect y our f inal credit score, including y our job/occupation, length

of employ ment, or whether y ou own a home. To improv e y our credit score, concentrate on pay ing y our bills on time, pay ing down outstanding balances, and not taking on new debt. Its likely to take some time to improv e y our score signif icantly. Consumer Protection Div ision 1050 E Interstate Av enue Suite 200, Bismarck, ND 58505. Tel: (701) 328-3404, toll f ree: (800) 472-2600. www.ag.nd.gov Why is credit scoring used? Credit scoring is based on real data and statistics, so it usually is more reliable than subjectiv e or judgmental methods. It treats all applicants objectiv ely. Judgmental methods ty pically rely on criteria that are not sy stematically tested and can v ary when applied by dif f erent indiv iduals. Under the Equal Credit Opportunity Act (ECOA), a credit scoring sy stem may not use certain characteristics - like race, sex, marital status, national origin, or religion - as f actors. What Ty pe of Inf ormation is in My Credit Report?

Consumer reporting companies collect and sell f our basic ty pes of inf ormation:

Identif ication and employ ment inf ormation - such as y our name, date of birth,

spouse name, employ er, current and prev ious address, home ownership.

Pay ment history, showing how much credit has been extended and whether

y ou'v e paid on time. Related ev ents, such as the ref erral of an ov erdue account to a collection agency, also may be noted.

Inquiries by creditors who hav e asked f or y our credit history within the past

y ear, and a record of indiv iduals or businesses that hav e asked f or y our credit history f or employ ment purposes f or the past two y ears.

Public record inf ormation, such as bankruptcies, f oreclosures, or tax liens.

You hav e the right to know what's in y our report, but y ou hav e to ask f or the inf ormation. The consumer reporting company must tell y ou ev ery thing in y our report, and giv e y ou a list of ev ery one who has requested y our report within the past y ear - or the past two y ears if the requests were related to employ ment. What happens if I am denied credit ? If y ou are denied credit, the creditor is required to giv e y ou a notice either stating the specif ic reasons y our application was rejected or that y ou hav e the right to learn the reasons if y ou ask within 60 day s. Indef inite and v ague reasons f or denial - such as not meeting a minimum standard - are illegal, so ask the creditor to be specif ic. Sometimes y ou can be denied credit because of inf ormation f rom a credit report. If

so, the Fair Credit Reporting Act (FCRA) requires the creditor to giv e y ou the name, address and phone number of the consumer reporting company that supplied the inf ormation. You should contact that company to f ind out what y our report said. This inf ormation is f ree if y ou request it within 60 day s of being turned down f or credit. This f ree report does not count as y our annual f ree credit report f rom that consumer reporting company. The consumer reporting company can tell y ou whats in y our report, but only the creditor can tell y ou why y our application was denied. General Tips Because y our credit report is an important part of many credit scoring sy stems, it is v ery important to make sure its accurate bef ore y ou submit a credit application. An amendment to the f ederal Fair Credit Reporting Act (FCRA) requires each of the major nationwide consumer reporting companies to prov ide y ou with a f ree copy of y our credit reports, at y our request, once ev ery 12 months. To order y our f ree annual report f rom one or all national consumer reporting companies, v isit www.annualcreditreport.com, or call toll-f ree 877-322-8228. If y ou request a credit report directly f rom a consumer reporting company there is a f ee. Additional inf ormation on the consumer rights under the Fair Credit Reporting Act is av ailable f rom the Consumer Protection div ision at www.ag.nd.gov.

Read `Your Credit Score: How to Improv e the 3-Digit Number That Shapes Your Financial Future` (4th Edition by Author Liz Weston.