A good credit score

A good credit score is what each of us aspires to. After all, a credit score is one of the important determining factors when it comes to borrowing money – and getting a low rate when you do. But trying to pin down a specific number that means your credit score is “good” can be tricky. After all, there are lots of different credit scores that lenders use when trying to decide whether to grant you a loan and one lender’s “good” score may fall into another lender’s “fair” credit category. (Not to mention, you may score differently from model to model.) Luckily, there are broad rules of thumb that can help someone figure out whether their credit is good or not. Let’s break it down.

How Do I Rate?

Most credit scores – including the FICO score and VantageScore 3.0 – operate within the range of 300 to 850. Within that range, there are different categories, from bad to excellent. They generally look like this:

• Excellent Credit: 750+
• Good Credit: 700-749
• Fair Credit: 650-699
• Poor Credit: 600-649
• Bad Credit: below 600

But even these aren’t set in stone. Again, that’s because lenders all have their own definitions of what is a good credit score. One lender that is looking to approve more borrowers might approve applicants with credit scores of 680 or higher. Another might be more selective and only approve those with scores of 750 or higher. Or both lenders might offer credit to anyone with a score of at least 650, but charge consumers with scores below 700 a higher interest rate!

Confusion About Credit Reports

The information listed on the reports does not come from the bureaus, they come from creditors. Creditors pay a fee to the bureaus for the service of updating and recording this information about all of our paying patterns across the country. Experian shows accounts and account names with paragraphs to the right displaying more detailed information about payment history and dates. Experian and Trans Union both list negative information first and clearly display the beginning of positive information as opposed to Equifax that combines all accounts together which makes it more difficult to decipher negative from positive. The score given to the consumers are not the same as the score bankers use which are for the most part FICO Scores.

How Do I Get a Good Credit Score?

How Do I Get a Good Credit Score?

To ensure you credit stays “good” in the long-term, it can help to pick one credit score and monitor your progress over-time. It also helps to pay attention to whatever is being cited as a “risk factor” — for instance, say, the amount of debt you’re carrying is too high — instead of a particular three-digit number. Addressing whatever is weighing down a single score will likely bolster your standing across scores. That’s because, while the exact credit score ranges may vary, most models are based on the same five categories:

• Payment History (accounts for 35% of most scores)
• Credit Utilization (accounts for 30% of most scores)
• Length of Credit History (accounts for 15% of most scores)
• Mix of Accounts (accounts for 10% of most scores)
• New Credit Inquiries (accounts for 10% of most scores)

So, to build a good credit score, you’ll need make all of your loan payments on time, keep the amount of debt you owe below at least 30% and ideally 10% of your total credit limit(s), maintain credit accounts for the long haul, add a mix of accounts (installment loans versus revolving loans, for instance) over time and manage how often you apply for new credit in a short timeframe.  

Tips for Handling your 1st Credit Card

• Understand the terms of the card. Know the interest rate, the fees and the payment schedule.
• Beware of 0 percent teaser rates. While 0 percent interest is enticing, the offer may tempt her to spend more than she can afford to repay. When the introductory rate is over, the interest rate will swell and so will her balance. Know what the "go-to rate" is. 
• Play with interest rates. To show your daughter how debt can accrue thanks to interest, plug some hypothetical numbers into our credit card calculators for some examples. Those $50 shoes and last week's $15 pizza delivery at 20 percent interest can get really expensive.
• Set a budget. If your daughter receives an allowance, she should learn not to charge more than she'll be able to pay. If she does, her credit card balance will balloon with interest charges.
• Pay on time. Your daughter will start to build a good credit history if she pays on time, even if she can't pay the balance in full. That takes us to our next tip:
• Pay in full. To avoid costly interest charges, she should try to pay her bill in full each month. If she can't, she should pay as much as possible.
• Don't go over the limit. If she spends too much, she'll incur additional fees for spending more credit than she's been allotted.  

Digging Deeper

Let’s dive a little deeper into tracking your expenses and learn how that can help you save money.

First, recognize that there are two different types of expenses: one-time and subscription. One-time expenses are those that usually happen once. As one-time expenses, they don't generally reoccur over time. For example, you might pick up an ice cream cone at the store versus signing up for an ice cream cone subscription. This is considered a one-time expense - even if you end up buying the same type of ice cream cone again at a later date.

One-time expenses can be a big deal when it comes to eating away at your bank account, especially if they occur frequently. However, they can be fairly easy to track since you have to make these purchases manually. Because they are on your radar, it’s easier to identify these expenses and do something about them.

Subscription expenses are those that keep popping up over time, and even monthly. Recurring expenses include bills such as your water bill, cable bill, and rent. You’re signed up, so you expect to receive these bills every so often. The cost of these subscriptions may or may not be fixed.

Now, subscription expenses are a little tricky. For some reason, you might find yourself justifying the recurring, subscription expenses more easily than the one-time expenses.

After Bankruptcy

A bankruptcy may be listed on your credit report for up to 10 years and there is a good chance your credit score will be rather low until you take the necessary steps to rebuild your credit.

For an overview and explanation of your credit standing after bankruptcy,check out Banco Financial Services. You’ll also get a look at your credit scores.

Rebuilding your credit after bankruptcy takes patience, persistence and a steady stream of monthly on-time payments.

A low-limit credit card is a great way to start. But because of the bankruptcy on your credit file, you’ll need to think small when applying for credit cards. After bankruptcy, you may not qualify for a run-of-the-mill consumer credit card. But you do have other post-bankruptcy credit card options.

Know Your Credit

Credit reports can be confusing. But have no fear: Banco Capital  is committed to demystifying credit for you. We can break down the firms responsible for compiling your credit reports — mainly Equifax, Experian and TransUnion (affectionately known as the major credit reporting agencies). We can also explain how to read and interpret your credit report, how banks and financial institutions use your credit information to make lending decisions and how your credit reports influence your various credit scores. You can also get easy-to-understand explanations of what factors influence your credit report, including payment history and credit utilization, and tips on how to improve it by viewing your credit report , updated every 14 days. With our Banco Capital, you’ll be able to discover how certain financial decisions and actions can affect your credit report and receive advice on how you can go about cleaning them up.

Improving Your Credit score Before Buying a Car

Improving Your Credit Score Before Buying a Car

There is no quick fix or fast method for improving your credit score. A good place to begin is by ordering your credit report from each of the credit reporting agencies and reviewing them carefully. If something looks incorrect, you will want to contact the agency that provided the report right away to begin the process of updating the information.

You should also consider ordering your credit score. Pay careful attention to the risk factors that are included with your score. These risk factors will tell you which elements in your credit history are impacting your credit scores and help you to understand where you can make changes.

In general, the most important thing you can do to improve your credit scores is to make sure all accounts are being paid on time, and any past due accounts have been brought current. The second most important thing you can do is to pay down the balances on your accounts, and keep the balances low on revolving accounts

Common Credit Score Facts

Common Credit Score Facts

Credit Reports and Credit History: Credit scores are not included with credit reports. Additionally, credit scores are not stored as part of your credit history. Your credit score is calculated only when your credit score is requested. Your credit score can change over time, based on your credit history (including late payments, amount of available debt, and more.)

Joint Accounts: Joint accounts are meant to help individuals who cannot qualify for a loan by themselves. With joint accounts, all of the joint account holders, guarantors, and/or cosigners are responsible for repaying the debt. The joint account, along with its credit history, appears on the credit report for all account holders. When all payments are made on time, the joint account can help build positive credit. However, if someone defaults on payments, all of the joint account holders will see the default on their own credit reports. Depending on the severity of the late payments and negative information, everyone’s credit scores could be impacted significantly.

How To Improve Your Credit Scores

How to Improve Your Credit Scores

If you reviewed your credit information and discovered that your credit scores aren’t quite where you thought they’d be, you’re not alone. Since your credit scores use information drawn from your credit report, your credit activity provides a continually-updated basis of data about how responsible you are with the credit you’re currently using. At Experian, we provide information that can help you see credit in new ways and take control of your financial future. You can learn more about:

• How choices that you make can improve your credit score
• Why using secured credit cards can improve your credit history
• What a credit repair service can – and can’t – do for your credit
• How to protect or restore your good credit after major life events like marriage, divorce, or the death of a spouse
• Why knowing your FICO® Score* is important when you consider making a big purchase
• When you know the kinds of activities in your credit that can affect your scores, you can work to take better care of your credit, too. Things like late payments, liens or bankruptcies all have varying levels of impact in your credit scores since they’re reflected on your credit report, too. Getting familiar with your credit report can help you see the impact these kind of events can have in your credit.

2017 Must Do's

Here are some ways that you can boost your credit score in 2017

1. Get your credit report, and report any errors you find.

Any move to boost your credit score must begin with checking your credit report. Get a free copy of your report from all three credit bureaus – Experian, Equifax and TransUnion – once a year fromAnnualCreditReport.com, and go over them thoroughly. Make sure everything you see is accurate, and if something isn't, report it immediately. Some things to look for:

Accounts you don't recognize.
Late payments you didn't make.
Closed accounts listed as open.
Credit limits that are too high or too low.
If you see any inaccuracies, gather up any evidence you have and notify the credit bureau in writing. The bureau then has up to 45 days to investigate, and if the piece of information cannot be verified in that time, it must be removed.

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2. Get a new credit card, and use it sparingly.

A new credit card helps reduce your utilization rate, which is the second-most important factor in credit scoring formulas. Here's how: Say you have a card with a $5,000 limit and a balance of $2,500. That makes your utilization rate 50 percent, well above the recommended total of 30 percent or less. However, add another $5,000 limit card and suddenly your utilization is slashed. Now you have $10,000 in credit and a $2,500 balance for a utilization rate of 25 percent. That decrease will likely help your score creep higher; It will also likely offset any temporary drop that can come when you sign up for a new card.

Don't add too many cards at a time, though. Ten percent of the credit scoring formula focuses on new credit. Applying for too many cards at once or applying too often can make it look like you are experiencing some financial problems and make you appear riskier to a lender. Even though it could reduce your utilization even more dramatically, applying for too many cards in too short a time can actually hurt you.

drag your score lower

3. Make payments more frequently.

Consider paying your credit card bill twice a month. Even if you don't increase the total amount you pay in a month, paying multiple times in a month can help your score. Here's how: A credit report is a snapshot of your finances at a moment in time. If you have a balance on your card at that moment the snapshot is taken, it can drag your score down, even if you intend to pay that balance in full at the end of the month and never pay any interest. However, if you make multiple payments each month – say on the 1st and 15th of the month – you improve the odds that your balance will be low when that next snapshot is taken.

Lower balances bring lower utilization rates. Lower utilization rates bring higher credit scores.

4. Make larger payments.

This one goes without saying. Those with the best credit scores tend to pay their balances off at the end of every month. If you can't do that, you absolutely must pay more than the minimum. Once again, lower balances bring lower utilization rates, lower utilization rates bring higher credit scores and higher credit scores save you money.

5. Pay off the card that is closest to being maxed out.

Your utilization rate isn't just about comparing your total balance to your total available credit. Individual card rates have an impact, too. If you have multiple cards, try paying down the one with the highest utilization rate. If you can get a good deal, you can also consider moving part of that card's balance to a new 0 percent balance transfer card. That way, you're reducing your utilization and reducing the interest you'll pay at the same time.

NEGOTIATE WITH YOUR CREDITORS

Late payments and defaults are a surefire way to send your credit score as far below the 800 mark as possible. If you've had financial trouble in the past, or see it fast approaching, there are steps you can take to undo or prevent damage to your credit.

If you foresee having trouble making payments, you can try negotiating a payment plan with your creditor. An altered payment plan could make it easier for you to pay on time. If you have late payments or debt collection items on your credit report, try asking the creditor to remove the derogatory items from your credit report, according to consumer law website Nolo. It might take some effort, but if you're successful, these steps could improve your score.

Planning for 2017

1. Make a plan. Financial experts generally recommend either paying off credit card bills in full each month or at least figuring out how to pay down the balances with the goal of eventually paying them off. That approach will also help protect your credit score, which can suffer if you carry a high balance relative to your credit limit on your credit cards. It also means that when a real emergency comes up, such as suddenly needing to buy new car tires or pay an unexpected health care bill, you can more easily cover those costs.

2. Save more. It’s a simple but vital strategy ahead of the holidays, when spending tends to go up. Saving up in advance, so you can buy gifts and make travel plans without going into debt, will make it much easier to start 2017on the right foot – without a massive credit card bill. Studies generally indicate that Americans are saving slightly more in the wake of the most recent recession. In the Bankrate survey,17 percent of respondents named “saving” as a top financial priority.

The Secret to Improving Credit

ome people are surprised to find out that their credit scores can often be improved significantly without disputing even one item on their credit reports.

When a lot of people think about "credit repair", the main thing they think about is "removing negative items." If all of your credit repair information came the mainstream media, it might seem as if that were all there were to it.

In reality, there is a lot more to a credit score than just "derogatory" items. (And there is a lot more to credit repair than just removing them.)

According to www.myfico.com, around 30% of your FICO score is made up of what we call credit utilization, or your "debt to credit ratio."

Believe it or not, it is often possible to get a significant bump in your credit score by doing nothing else but adjusting your debt to credit ratio.

There are two basic problems tied to credit utilization that could be affecting your score:

1. Too much credit available (this is rare).

2. Not enough credit available.

The more common scenario is #2, in which a person is using too much of their available credit.

For these people, they can often achieve a score increase by simply improving their debt to credit ratio.

This is normally done in one of two ways:

1. Paying off a certain (sometimes large) amount of debt in order to reduce the amount of credit you're using.

2. Opening up a new credit line to increase your amount of total available credit.

For most people, option 2 is easier to accomplish than option 1.

When you open a new credit lien, the "credit limit" of that line gets added to your total available credit.

Here's an example of how it works:

If you have one $10,000 credit card and your balance is $8,000, your debt to credit ratio is 80%. This means your credit utilization is HIGH and it could be hurting your score.

Let's say you open a new credit line in the amount of $10,000. Now you have 2 $10,000 credit lines, and your debt to credit ratio has gone from 80% to 40% overnight!

Suddenly, you're using a lot less of the credit that is available to you. You're debt to credit ratio (or credit utilization) has improved, which should result in a higher credit score.

For people with bad credit, getting approved for an extra $10,000 in credit might seem next to impossible.

The key is to look for the right kind of credit to apply for.

There are four basic kinds of credit that people with bad credit can usually get approved for:

1. Secured credit cards
2. Sub-prime merchandise cards
3. Sub-prime Visas or Mastercards
4. Store credit cards and credit lines

Of these choices, sub-prime merchandise cards and store credit cards are the best choices for improving your debt to credit ratio because they usually come with much higher credit lines than a secured credit card or sub-prime Visa or MasterCard.

And when you're trying to improve your debt to credit ratio, the size of the credit limit is important.

The other important thing to know is whether the card reports positive credit to the credit bureaus. In order to be useful, a card has to report to at least one of the three major credit bureaus. (It's best if it reports to all three, but a card that reports to at least one can still be used as a foot in the door to important pre-approved offers.)

In this article we've explained just one way that you can improve your credit score without actually disputing anything on your credit reports. There are more methods like this available, and those are covered in detail in the Credit Repair Intelligence System.

Tip of The Day!

Scores are calculated using information in your credit files that are maintained by nationwide credit reporting agencies like Equifax, Experian, and TransUnion. The vast majority of consumers have errors on their credit reports that go undetected for years because they’ve never taken the time to review them.

If data in your credit reports is negative or incorrect, it’s probably dragging down your credit scores without you knowing. However, it’s easy to dispute errors and get your credit reports corrected. Start by visitingannualcreditreport.com to view or print each of your 3 free credit reports.