A few factors affecting your credit score

Your FICO score mainly depends on the following factors. If all these factors are handled wisely, you can get a good credit score. Here are the factors affecting your credit score.

1. Your financial Records – Payment records are the most significant aspect affecting your credit score and contribute to about 35% of your credit score. It shows your regularity with your payments. Timely payments go down as a big positive in your credit report. You might even witness a hike in the credit score if you pay the bills before the due date..
Delinquent or “charged-off” accounts affect your credit score to the maximum. It is best to pay them off as soon as possible. The stigmas might still stay on your credit report even if you have paid them off. However creditors take your application into consideration if you have tried to repair your credit by paying the entire pending amount off.

2. Outstanding Debt – Outstanding debs makes up for 30% of your credit score. This is the amount you owe to your creditors to your credit limit. Experts recommend that you keep the credit utilization under 35-50% of the total limit. A low credit utilization rate helps improving your credit score.

3. The length of your Credit History - This constitutes 15% of your credit score. A long credit history has a fantastic affect on your credit score. If you have a number of credit cards, you might as well consider closing the recent ones rather than the old ones. You can, in stead adjoin as an authorized with a relative or a family member to one of their old credit accounts. This helps boosting your credit score.

4. Type of Credit Account – Almost 10% of your credit score depends on the kind of accounts you use. Unsecured credit accounts do no good to your credit score. On the other hand a good mix of various kinds of credit accounts is a big advantage and helps improving your credit score.

5. New Credit Accounts – Do not apply for a new credit card if you don’t need it. A request for a credit card may prompt a hard inquiry from the creditor. Even a single hard inquiry slashes your score by 2 to 50 points, which further remains on your credit report for a period of 2 years. Hence, applying for many new credit cards within a short span of time is a big ‘No’.

Dealing with Identity Theft

Identity theft is one of those crimes in America that is growing at a steady pace. At times people don’t realize that they have been a victim to identity theft until after a long time. You need to check your credit report regularly in order to keep yourself away from identity theft.


If you have not been receiving the concerned bills or other mails then you might be a victim to identity theft. You might also be a victim if you receive credit cards that you did not apply. Many people realize that their identity has been stolen when they apply for loans or credit and their applications are rejected or denied. If you have not been keeping an eye on your credit report for a long time and you have no idea why you are being served court papers and arrest warrants, then that is a clear case of identity theft. Similarly if you get calls or letters regarding the payments of things you did not purchase then you are definitely staring into an identity theft.


Things to do if your identity has been stolen

1. You are required to place a fraud alert with all the three credit reporting bureaus on your credit report. Put in a victim’s statement to your credit report in order to get the bureaus to contact you regarding the verification of your future credit applications.

2. Have all the inaccurate information corrected in your credit report. You need to request the bureaus to remove the inquiries from your credit report that were not initiated by you. Make sure that your personal details like your name, address and S.S.N are correct.

3. Inform your credit card issuers: Make sure that you inform the credit card companies and apply for replacement credit cards. Close all your old accounts and write a letter to the credit card issuers explaining them the reason for your actions.

4. Report the theft to the police and get a police report copy. Most importantly report the theft to the Federal Trade Commission: Consumer Response Center
Federal Trade Commission

600 Pennsylvania Ave, NW Washington, DC 20580
Toll-free: 1.877.FTC.HELP
TDD: 202.326.2502
www.ftc.gov/ftc/complaint.htm


For more information about your credit report and identity theft please visit www.reliacredit.com.

Protecting Identity Theft

Identity theft is one of those crimes that has been swelling at a steady pace through out America. It is important to guard yourselves against this amplifying crime else you could end up ruining your financial life.

In order to protect self from identity theft you need keep a regular record of your credit activities and stay watchful all the time. Some precautionary measures are as follows

Don’t give away your S.S.N when you are not sure enough: In some cases it is important to give your S.S.N but you perhaps already know when it is required in daily life to give your S.S.N to a person. However, at times there are cases when a person asks for you S.S.N on the phone or on the internet, it is then, that you need to be aware of theft. Giving away the S.S.N on the internet is not a good idea as it becomes accessible to the tech savvy thieves sitting in front of the computer. Similarly you should make sure that the S.S.N is genuinely required by the person who is asking for it. Know the reason before giving your social security number to anybody.

Be careful while making checks: It is not a good practice to write your driving license or Social Security number on checks. This way the thief is presented with even more opportunity. In some states it is illegal to write credit card numbers on the check. Make sure that you don’t write any such information on your check that makes you vulnerable to identity theft.

Check your credit report regularly: Checking your credit report regularly helps determining if there has been any mischief in your financial dealings. If you encounter inaccuracies you should contact the bureaus at once and inform them of the mistakes. Credit reports are availed to every American free of cost once a year. Make sure that you get your hands on your credit report and check for credit activities not carried out or performed by you.

Be careful while creating pins and passwords: Make sure that you create unique PINs and passwords. Avoid using the sequence of digits in your S.S.N, your credit card number or your driver license. Also avoid using your middle name, your birth date or your mother’s name. If your passwords or PINs include the above, you should change it as soon as possible as it is cake walk for thieves these days to crack such passwords and PIN codes.

What Does Your Credit Report Contain?

Credit history or a credit report envelops all your credit activities. Credit report prepared by the three major credit reporting bureaus has the following major components.

First up it contains all your personal details like your name, address, phone number, birth date, and your Social Security number. This helps make sure that the credit report is to the point and belongs to the right person as there may be many people with the same name.

Next are the credit activities that you have performed over time. This involves public record information like foreclosures, tax liens and court ordered payments. This helps a lender decide your trustworthiness. This also gives an idea about the legal judgements and defaults against your name. Information such as bankruptcy remains in your credit report for as long as 7 years and is a big stigma.

Other credit related information like loans you made, number of credit cards, late payments, etc is mentioned in your credit report too.

The next section comprises of ‘Inquiries’. This encapsulates a list of creditors, lenders, insurance companies and other organizations that have requested for your credit report. Inquiries remain in your credit report for 2 years and are again, a measure of your credit worthiness.

Avoiding Credit Scam

There have been many cases when Americans have ended up ruining their financial lives because of credit scams. Many people with a bad credit who are desperate to improve their credit scores are vulnerable and fall into the trap. One should always keep in mind a few points when deciding upon a credit repair organization.

“Consumer Credit File Rights Under State and Federal Law” provides you with knowledge about your right to get a credit report and dispute inaccuracies in the credit report. A copy of this law is given to every customer of the genuine credit repair organizations which are governed by the Credit Repair Organizations Act.

The legitimate credit repair organizations provide their customers with a copy of the contract before they are asked to sign it. The contract has the following details

1. The charges that apply for the services being availed to you.
2. The time required for the services to be performed
3. Name and Address of the organization.
4. A statement that says that the contract can be canceled within 3 days.

Fake credit repair organizations may ask for an advance payment either partial or complete. Many such fake organizations have also been reported to ask the customers to create a new identity and get a new Social Security Number or the Federal employer identification number (EIN). At times they also require you to sign a form that says that you are waiving your rights under the CROA.


However experts suggest that you start your credit repair stint yourself and that there is nothing that can’t be done on your own as there is legally nothing such organizations can do to improve your credit score. Disputing information is as easy for you as it is for the credit repair organizations. All you need to do is write to the credit bureaus about the inaccuracies present in your credit report and disputing the wrong information.

Before hiring any company to manage your credit or repair your credit
, you need to do make sure that you are not being scammed. You can do some research on the internet regarding the company concerned.

Detrimental Affects of Bad Credit

It is not a very uncommon concept that bad credit can have detrimental affects on the financial life of a person. There are various ways in which a person can be affected with a bad credit.


1. Not qualifying for large purchase loans: Apparently there is no such thing as ‘minimum credit score that qualifies you for a loan’. It depends on the lender if he is to allow you a loan with your credit score. Different lenders have a different idea of a good credit score. However a FICO credit score above 650 is considered good.

Having a bad credit may deny you simple loans such as home loans, car loans etc. It can further have adverse affects as it may even make purchasing a difficult task. Even purchasing furniture and electronic entities can become tough.

2. Less chances of qualifying for credit cards: One of the major determining factors for the issue of credit cards to an individual is his credit score. A bad credit score will not qualify a person for more credit cards. A person with a bad credit score is assumed to have bad credit worthiness and hence is not allowed more credit cards.

Applying for too many credit cards may just creep in to the credit report as inquiries which are bound to reduce the credit score to a further bad figure.

3. Higher interest rates: If, however, you have been allowed a loan in spite of having a bad credit score, do not consider it as a problem solved. You may be charged extravagant rates of interest on the loans you make. A person with a good credit score will be paying a much lower interest rate. The difference is huge. A person with a good credit score may be paying an interest of 10% per annum as compared to a person with a bad credit who pays an interest at 20% per annum. Exorbitant interest rates can further leave a big stigma in your credit report if the interest is not paid on time.

4. Limited credit limit: A bad credit record will hamper the credit limit to the fullest. This can affect the purchasing power of the credit card holder. The debt should not exceed more than 35% of the total available credit on the credit card. This helps keeping in check the expenses and does not contribute to a bad credit rating. Credit utilization is hampered by a rise in balances with the same credit limit which further goes down in the credit report as a negative remark.

5. Paying hefty insurance premiums: With a bad credit, one may be paying hefty insurance premiums. Some insurance companies also take into consideration an applicants credit score in order to judge if the person will make a high number of insurance claims in the future. Fewer incidents of auto accidents have been reported in case of individuals with good credit as compared to those with bad credit hence insurance companies look up a persons credit score before accepting the application for insurance. These days however ‘insurance score’ is being considered by more and more insurance companies. But still a credit score of 650 plus can help you cut down more than 15% on the insurance premiums.

6. Renting space becomes difficult: A bad credit makes it difficult to rent office space or an apartment. A bad credit implies that a person would be lousy in paying the rents on time and has a low trustworthiness. It becomes difficult to lease a retail or home property as you may be subject yourself to higher deposits or higher rent amounts or an altogether denial of lease.

Making Amends in the Credit Report

You may have had a very bad credit history till date but that does not mean that there is no way to resurrect and to make amends in the credit history. Many Americans have improved upon their credit history after having had a pathetic credit score. It is not an impossible task to improve upon the credit score. Finances when managed well automatically lead to a good credit score.

The credit reports are constantly upgraded by the three credit bureaus. Although some negative credit activities stay in the credit reports for as long as 2 years and some for as long as 8 years, it does not mean that all efforts to improve the credit history would go in vain.

Experts have long been suggesting ways to improve the credit life. Some Americans have also made it a habit to check their credit report on a daily basis. This way they avoid inaccuracies in their credit report and can also keep a check on the credit fraud. Hence to make a good credit report one should follow the simple rules explained by those who have been into finances since a long time.


1. Keep low balances: Keeping low balances on your credit card has a very good impact on the credit history. Keeping the balance under 30% of the credit limit will definitely help enhance the credit score in the long run.

2. Avoid opening new accounts: you don’t want to be held guilty of trying to get a lot credit in a very short time. It may have a negative affect on the credit history. Hence opening new accounts may raise the credit-utilization ratio but this may just prove to be a wrong move and might increase the number of inquiries. There are no bonus points for opening new accounts. In fact closing accounts also does not affect the credit history. So the accounts that are not in use should be closed as soon as possible.

3. Have a long credit history: if you have had a good long credit history then that is definitely something to be proud of. That goes down in the credit report as a positive remark. This is something that can not be changed overnight so one needs to be patient and look at long term benefits while working on having a good and lengthy credit history.

4. Get your acts together and pay on time: This is the most important thing one can do to get a good credit score on the report. Paying off all the pending bills and outstanding debts will have a great impact on the credit score and it is likely to shoot up in such a case.

5. Get rid of false information: In case any false information is present in the credit history, it should be reported to the bureaus a soon as possible to avoid lowering the credit score for a mistake that was not committed by you.