If you are cleaning up your credit report then you understand the importance of your credit score. Your credit score can impact your lifestyle more than by how much money you make.
With a low credit score you may be getting turned away from jobs you are qualified for. You also are experiencing difficulty getting approval for car loans or credit cards. When you do receive approval it is with stomach churning interest rates.
However if you can learn how the credit system works then you can use it to your benefit. You can create a higher quality of life for yourself and your family without earning any extra income.
The credit bureaus use a mathematical equation to determine your credit score. The bureau puts your credit information into a computer and the computer spits out your credit score.
Your credit score is a way for lenders and employers to measure you. Lenders will often not look at any other factor other than your credit score when you apply for a credit line. You credit score determines how the credit world perceives you.
Let us discuss how to use this system to your benefit. There are two things that carry more weight in the credit system algorithm than any others.
1. Erase negative listings. Negative listings are going to bring your score way down and need to be erased as soon as possible.
2. Keep an unsecured revolving line of credit. This can be done by almost anyone.
The credit bureaus equation is kept secret and not released to the public. However after review of thousands of credit files it has been learned that having an open unsecured line of credit is just as important as removing negative items.
An unsecured credit line will increase your credit score because:
1. You are creating positive payment history with every month you pay your bill on time. Also credit bureaus like to see that this account has aged. Meaning it has been an open account for a while.
2. Improves your debt to credit ratio. The credit bureaus reward people who have high available credit and low outstanding debt.
This credit line will carry more weight if it is unsecured such as a car loan or credit card. However if you are unable to get approval, then you should consider a secured credit card or a secured loan.
An open credit line will help you build credit but it is still very important to erase derogatory listings from your credit report. If you can not get an unsecured credit line and do not want a secured line of credit then remove the derogatory listings and reapply.
By removing bad credit items and building credit, you can achieve a 700 credit score and enjoy a better quality of life for you and your family.
To learn more about how to remove derogatory listings such as charge offs and for a free credit repair letter or for to learn how to proceed with an equifax dispute or experian dispute visit us.
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