If you have a good credit score, you may be feeling secure in your ability to obtain credit when you need it. However, you may find yourself in a troubling situation when you apply for a loan and get rejected based on your credit report. You may be wondering ‘what happened?’

Well, even people who always pay their bills on time can get into financial trouble if their credit report is messed up. Read up the article by Harrine Freeman

By now everyone is aware of the Vantage credit scoring system developed by the three major credit bureaus Equifax, Experian and TransUnion that grades consumers on a grading scale of A-F. I have done extensive research but have yet to find out how lenders will use this score or what lenders will choose to use the Vantage score as opposed to the FICO score. Will they be flexible in their analysis and look at the actual score or just look at the grade of A-F.? Unfortunately, no one knows for sure. For now, when applying for a loan ask the lender which credit score they are using.

I recently refinanced my home and the lender used the FICO score. Well, I recently obtained a copy of my credit report and credit scores from the three major credit bureaus, Equifax, Experian and TransUnion. I have not made any late payments in the past 10 years; therefore I expected to get the highest credit score possible or at least very close to it. My scores were 760 and above. When I ordered by Experian credit score I wanted to order a FICO score yet I only had the option of getting a Vantage score. My Experian Vantage score was 819.

Good Credit Score: Even with good credit score you can get penalized

To my surprise all of these ridiculous reasons were given why my credit scores were not higher:

1. Your report does not show real estate loans – this was incorrect, I have had a mortgage for the past 7 years.

2. Your report shows that available credit across your open revolving accounts is too low – I only have one credit card with a limit of $3,000. They are telling me that if I had more credit cards my score would be higher.

3. Your report shows that the ratio of balances to credit limits across your open revolving accounts is too high – My balance on my credit card was approximately $900 which is only 30% of the credit limit which is the suggested balance that consumers should have on their credit cards.

4. Your report shows that the time since your oldest revolving account is too short. – Wrong. I have one revolving account, my credit card which I have had for the past 10 years.

5. Your report shows one or more inquiries on file – I had one inquiry in June 2005. One inquiry in February 2006 and one in October 2006. Inquiries should be obtained no more than twice a year unless you are doing comparison shopping. I am being penalized because I had two inquiries within one year.

Well, needless to say, I wrote each credit bureau and disputed all the reasons they gave me. I received two responses back and am waiting for the last response. After I receive it I will order a copy of my credit report again to see if my scores have increased. I have struggled to find out how one obtains an 800 FICO credit score or higher. From the looks of things it doesn’t seem like that is possible anymore. Whether you have good or bad credit, the credit bureaus will find ways to make sure your credit score is not as high as it can be.

I advise everyone whether you have bad credit or good credit to order a copy of your credit report once a year, read every single line on your credit report and read all of the information provided along with your credit report. Make sure everything listed on your credit report is accurate. Even a few points on your credit score can make the difference between getting approved or getting declined and we all need those extra points. Good luck!

Harrine Freeman is a speaker, personal finance expert and the author of, “How to Get Out of Debt: Get an “A” Credit Rating for Free Using the System I’ve Used Successfully with Thousands of Clients.

She is the CEO of H.E. Freeman Enterprises, a credit repair and personal finance services company. She is a member of the American Association of Daily Money Managers, SPAWN, Toastmasters, AAUW, National Association of Women Writers and the Women Network.

For more information on how to get out of debt or to buy her book please visit http://www.hefreemanenterprises.com She can be reached via email at hfreeman@hefreemanenterprises.com.

Article Source: http://EzineArticles.com/?expert=Harrine_Freeman
http://EzineArticles.com/?Even-People-With-Good-Credit-Are-Penalized&id=571378

Read more about credit score ranges on this blog.

What’s a Good Number to Aim for in on the Credit Score scale?

I recently received this question via email:

“My credit score is 685. Would that be considered a good number for a credit score?”. Peter S. from New Jersey.

Here is my answer:

Peter,

Although 685 is considered to be a decent credit score, however, it’s not excellent. Any number lower than 700 has some room for improvement. It really depends what is your objective. If you are applying for a loan or mortgage hoping to get the rock-bottom interest rates and the best terms lenders have to offer, then you will want to put some effort into raising your credit score to 725 or higher – that’s where the “very good” to “excellent” range typically begins.

650 and above is considered very good. 620-650 is considered good (average FICO score) in some cases there might be a problem with large loans. 620 and below is considered a credit risk, although that does not necessarily mean the person cannot obtain credit.

So, what do you need to do to raise your credit score 40 points?

Raising your credit score 30 points or more requires effort and some patience. Exactly how long it will take and how difficult it will be, is really based on your current situation. First of all, you have to find out what is the reason for a low score. If you’ve experienced an event such as bankruptcy, repossession, late or missed payments it might take a while for your credit score to recover from such a blow.

However, there are surprisingly many cases when it’s just an error in your file. That is why it’s definitely recommended to check your credit report thoroughly from time to time and file a dispute to any inaccuracies you can find (visit the above link at the ftc.gov website to learn the exact steps that you need to take to submit a dispute.

Remember, that credit bureau employees are people too, and they can make a mistake. Or perhaps one of your creditors has made an error in reporting your payment information. For instance, perhaps your Auto Finance Company erroneously reported that you had missed a payment? Be sure to check your report for any errors and get them fixed ASAP, and get your credit score back on track.

You found no errors, no bankruptcy … now what?

If your credit report is correct, and no special situation, such as bankruptcy, applies then you need to look at your credit card balances? If you are aiming for an excellent credit score, make sure your balances are low. What does that mean? Most experts recommend maintaining balances 25% or less of your total credit line.

If my credit card balance is about 50% of my total credit limit, can that be an issue?

Yes it definitely can! If you have anything above 50% – your credit ranking will be lowered. Let’s say you have three credit cards, first card has a $4,000 credit limit, second has a $6,000 limit, third has $5,000 limit. In this case the total “credit line” or “credit limit” would amount to $15,000. If your total balance on these cards of 7,500, your total balance would be occupying 50% of your total credit limit, which is not good. If that’s the case, my advice would be to start paying off your credit card balances each month as much as you can afford.

If you absolutely have no clue why your credit score is less than ideal, perhaps you just have too much total debt, such as car payments, student loans, personal loans. Or perhaps your credit history is too brief. Whatever the case, it’s always a good idea to check your credit report at least once a year, and follow these tips for understanding your credit score ranges and Credit Score Range Chart , so you know what guidelines to follow.

Read more tips on this mycreditscorescale.com/ blog.

Your credit score is a three digit number that represents your entire credit history. 

Credit reporting bureaus calculate this number by looking at numbers such as outstanding debts, if you pay on time or not, and whether you carry a balance on your credit cards.

A typical FICO credit score runs from 300 to 850, with 300 being the worst, and 850 being the best credit score rating. With that said, you may be wondering what is the best possible credit score that one can have.

What is an Excellent Credit Score & Does anybody have an 850 credit score?

An excellent credit score sounds great, but just what is it and does it really exist? That is a question many individuals ask when they start to build credit.

Even the people working for credit score agencies admit they have never seen an 850 credit score (watch the video from Youtube, on which an Equifax employee admits that he has never seen one), and don’t know how one could get such high credit score.  It’s open to speculation whether it’s possible to achieve that score, and the only people who could actually tell us how to get the top score, would be people from FICO – the ones who developed the formula.

Excellent credit score. The fact is that fewer than 1% of people have the score higher than 800; so anything around 800 or above can be considered a very good or even excellent credit score, and you’ll be able to secure the best possible rates available, from the best possible lenders available.

And even if your score is above 720, you should be in pretty good shape when applying for loans and credit cards – you will be able to get prime rates most of the time, and some expert say that to get a prime rate on a home loan, it’s enough to have a score of 650 or higher.

So, to sum up, don’t worry about getting your credit score close to 850. An excellent credit rating is anything over seven hundred fifty one. The average credit score that is most often seen is around six hundred sixty. This is fair; good is from six hundred sixty one to seven hundred.

Any credit rating that is under six hundred twenty is grouped together in the poor rating pool. In the grand scheme of credit ratings, it is possible to recover from a poor rating but it is not easy.

What to do if you want an excellent credit score?

When it comes time to finance a home, car, or new family member, you want that credit available. Not only does your credit score affect your likelihood of obtaining a loan, it also determines which interest rate you will pay. Those with low credit scores will pay far more in interest rate charges than those with excellent scores. So, what should you do if you want an excellent credit score?

• Never, ever miss a payment.
• Send your payments on time.
• Limit the amounts of consumer credit you have got.
• Periodically – at least once a year – review your credit report (it’s free).

Read more about credit score ranges on this blog.