One of the most important aspects of overall financial health is maintaining a good credit report and credit score. Unfortunately, too many Americans don't know how important credit reports are or don't know how to improve their credit after bankruptcy.
The Fair Isaac Corporation has developed a method of assessing borrower risk. This assessment comes in the form of your FICO credit score, which can fall between 300 and 850. Those with "excellent" credit (a score between 760 and 850) benefit from greater access to credit, lower interest rates and more.
Did you know that your credit score can affect all of the following?
These days, credit scores aren't just checked by lenders anymore - potential landlords and employers more often include a credit check as part of an applicant's background check. If your credit score isn't so hot, it could seriously hamper your lifestyle.
While the exact formula used to determine credit scores remains a secret, the following factors are known to affect your credit score:
These guidelines outline what you can do to keep your credit in good shape. Besides sticking with the above habits, it's important to keep track of your credit report. Luckily, that's a free and easy task.
Since the passage of the Fair Credit Reporting Act, Americans have had access to one free credit report from each of the "big three" credit reporting bureaus each year. To access your free credit report, visit www.annualcreditreport.com. (Note: this is the ONLY site where your credit report is FREE.)
Many credit reports contain errors, so it's important to check your reports regularly to make sure your information is all correct and up to date. If you do find mistakes on your credit report, you can dispute them following these steps outlined by the Fair Trade Commission.
Your credit report is adequate for giving you an idea of your overall credit health. If you're interested in learning your credit score, you can buy it from myFICO.com. If you're in the process of borrowing a large amount of money (to buy a house, for instance), buying your FICO score might be a good idea.
If you're considering filing bankruptcy, know that a bankruptcy filing may stay on your credit report for some time. However, filing bankruptcy also gives you the opportunity to rebuild credit and eliminate old debts that may be weighing down your credit score.