credit report - 3 Reasons Why Your Credit Scores Change

Get Your Prepaid Visa Today Basics Your credit score is affected by three main factors Credit balances Number of credit lines Payment history Credit Balances This is the amount of money you owe on different credit lines. Each credit card, auto loan, or other form of credit is known as a "credit line" or "trade line". If you have two mortgages on your property each one is a separate trade line on your credit report. Each trade line has a maximum available credit or initial size. Your car loan for $30,000 has an initial loan size of $30,000. A credit card may have a $10,000 limit with $1,000 in charges on the credit card. Your credit score is affected by how close your balances are to your limits. If your credit cards are close to the limit, that will start affecting your credit. Number of Credit Lines If you have too many credit lines your credit score may decline. It also may not be possible to get additional credit even though your credit is good. For example, if you have a mortgage and you co-sign on someone else's mortgage then you both mortgages will show up on your credit. Although both may be paid promptly and your credit is otherwise good, you may have trouble getting a car loan. A lender will see both mortgages on your credit report and think your debt burden is too high. The fact that you co-signed on someone else's loan may not help you much, because you are still liable for the payment. Payment History Your payment history is one of the most important factors in your credit. When you are past the grace period on a bill the payment then becomes late. Credit reports track how late you are and in which months you have been late. You may be late by: 30 days 60 days 90 days 120 days More A lender will treat an occasional 30 day late on a credit card as an honest mistake. Repeated lates or a late payment on a mortgage are viewed in a much worse way by mortgage lenders. Summary Your credit is critical to your financial well being. You should monitor your credit on an ongoing basis to makes sure there is no fraud being committed against you and prevent errors from remaining on your credit report. Get Mortgage Rates, 25+ Free Mortgage Calculators, Mortgage Quick Tips and Much More 30 Year Fixed Mortgage News 50 Year Mortgage News Article Source:http://EzineArticles.com/?expert=Ben_Afzal credit report - What your Credit Score Means to your New Car Finance Rate There are three kinds of people when it comes to credit scores. The first group of people can tell you exactly what their credit score is because they check it religiously. The second group of people has a vague idea of what their credit score is, but they aren't too worried because they generally pay their bills on time and don't exceed their credit limits. The third group of people has no idea what their credit score is other than knowing it's probably pretty bad, and they feel it would simply be better to not know. Eventually, people from all three groups walk into a car dealership with the intent of purchasing a new car, and one of the first things the dealer will do is pull a credit report. The dealer is looking to establish what sort of interest rate will be available to each particular person, because a credit score basically defines if a buyer is a good financial risk or a dangerous one. A credit score is comprised of many factors, including past and present payment histories, credit balances in relation to available credit, and the amount of credit available. The reason why it is important to keep a high credit score is because it is these people who are offered the best interest rates. The 0% financing offers which are so widely publicized by dealerships are actually only available to a minority of buyers whose credit is immaculate. Everyone else gets offered a higher interest rate, and, for some with poor credit, these rates can be up into the double digits. This is why it is so important to not only know what your credit score is, but to keep close tabs on your financial health. A couple of missed payments can damage your credit score considerably and may wind up adding hundreds of dollars in finance charges to a high interest car loan. Having a high credit score will pay off when financing a new car.