If you are planning to borrow money for a new house or a car, you should know some facts. Before lenders approve your application for house or car loans, they will evaluate you if you are capable to pay your debt monthly, in short if you are a good customer. The first things you should know is the credit score, everything about it. Credit score is the most significant factor that lender will look. It is a three digit score that says your capability in the credit industry. The score is calculated in a very complex algorithm way using your credit history. Credit score can go as low as 200 points that imply that you are a "danger" if the lenders approved your application because, for them, you cannot pay your debt. The highest point is 850 which are hard to get and for the lenders, the magical score will be at 720 where you are eligible for all types of loans with no down payment and with very low interest rates. Since we mentioned interest rates here, it is essential to know that these rates vary with scores. If you have the good score, chances are you can get a loan with low interest rate while if you have a middle to low score, you can have loans with very high interest rates. So, you know that credit score is very important, you must put effort and time to improve your credit score in weeks of so. Almost all people have less than a week to increase their credit score however, with recent technology; there is a possibility to improve the score quick. There are also do-it-yourself ways to increase score.
After the score, you should the agencies giving the credit scores. There are three credit bureaus that calculate the score; Equifax, Experian and Transunion. How are they significant, let say for example, you want to buy new a car. They car dealer will look to your credit score and you should present the credit score having the highest. These three credit bureaus have different scoring scheme so you can have the three different scores. Now that you know which bureaus give you the highest score, you should contact every possible car dealer that accepts credit from that credit bureau.
Enhancing you credit history have the positive effects in your score. There are fix and tricks to improve your credit score in days, weeks or months but the surest way to enhance it is by paying bills on time. Avoid delinquent paying whether it is a small or big one. Removing any outstanding collection by paying debts on time can give you an increase of as low as 20 points. It is important that after you have paid all outstanding collections, you ask for the deletion or payoff letter. This letter shows that you have completely paid all debts and you must show it to the credit bureaus as a proof of payment. Within a few days, you can see an improvement in your credit report that will surely boost your score. Now that we are talking about credit report, make it a habit to check your credit report for there are times that incorrect information is listed in your report. Incorrect information can cause damaged to your score so dispute any wrong information in it. This is your right as the law says.
Having known all these facts, it will be your turn to improve your score but you should keep in mind that the improvement of your score depends on the effort and time you put.