Credit Score Range - Understanding Credit Scores Will Help You Be Successful With Your Next Loan!- By: ChloeB Lowther
Are you currently looking to take out a loan or new card? The financial institution will use the credit score range to access your application.
With the current financial climate, lenders are becoming more fussy as to who they will grant new loans and cards. Prior to the recession, most of us probably scored in the 700 range i.e. a relatively high result. In fact, sometimes it didn't really matter as often the lending manager didn't even review your file properly. They were less concerned with whether people could afford new debt than meeting their targets and getting their bonuses.
But now that has changed. The collapse of various banks and finance houses has made everyone a lot more careful. Your bank manager is probably concerned about his job and is less likely to be granting new debt facilities.
So how can you be successful in your next application? Understanding how the credit scoring system works is a good start. If you haven't already done so, you should get a copy of your report from each of the 3 bureaus i.e. Equifax, Experian and Transunion. Check the file to see if there are any mistakes. If you find some, make sure you get these rectified as they will impact your score.
You are legally entitled to have any mistakes rectified or else removed from your file. You do not need to prove that a mistake was made. All you have to do is write to the credit reporting agency and advise them of the error. They will then communicate with the financial institution that reported the particular account and ask them to prove their report. If they fail to respond the entry will be removed from your file and your credit rating should improve. If they do respond and their report is proved correct, you have lost nothing as there is no impact on your account. So it is worth checking your file carefully.
As you check your record, you may come across old accounts that were never closed. A lot of us repay our debts but forget to close the account. Your next task is to write to these old creditors and ask them to confirm the facility is now closed.
If you can afford to pay down some of your existing loans or cards, this will help your application. Ideally your new lender would prefer if you owed less than 35% of the available balance. So why not try and raise some cash to repay some of your existing balances. Even a little will help. Now I know that you won't have much spare cash if you are already considering a new loan but have a look around your house and see is there anything you could sell on EBay or similar site in order to raise some funds. Be creative and you will be amazed at what you can do.
It also makes sense to make sure that you really want this new item be it a car, a house etc and that you can comfortably afford to make the repayments. If you are borrowing money to fund a purchase, you want to be sure you know exactly what you are getting into. It is a lot easier to spend money than to repay it. So ask yourself on a scale of 1-10 how much you really want this item and what are you willing to do to raise the funds to repay your loans and other debt.
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Don't be tempted to make a number of applications for your new loan. All of these will result in additional queries against your name and new searches make lenders nervous. Now you are a little bit stuck as it is only when your credit score is accessed that your new loan rate will be determined. So there is a chance that one bank may offer you a better deal than another.