January 26, 2011 (PowerHomebiz.com) A Credit Score is a number based on the statistical analysis of a person’s credit files. It is a measure of how diligently a person makes payments relevant to credit cards, loans, telephone bills, insurance premiums, etc. It represents the creditworthiness of the person in question and is based on credit report information sourced from credit bureaus.
Credit scores are helpful for the lenders such as banks and credit card companies. They use it to evaluate the potential risk involved in lending money to the consumers and to mitigate losses. Basically lenders use credit score to analyze who qualifies for a loan, at what interest rate and within what credit limits. Credit scores also help lenders to determine which consumer brings in higher revenue. Credit scoring is not just limited to banks, but insurance companies, landlords, employers use the same technique. The Credit Information Bureau (India) Limited (CIBIL) was implemented by the Government of India and the Reserve B! ank of India to provide credit information about commercial as well as consumer borrowers to the banks, non-banking financial corporations, financial companies and credit card companies. CIBIL score ranges between 300 and 900. Most significant factors that determine CIBIL score are repayments of loans and credit cards.
Given the importance of credit score in one’s financial life, it is essential for a person to manage his/her credit report in the best possible way. The position of a person on a credit score scale depends on payment history and time frame of the items on the credit report. The following points are to be kept in mind in order to improve one’s credit score:
A) Ensuring to get a copy of credit report –
- Scrutinizing the credit report is essential
- In case of any queries, one should follow it up with the CIBIL.
- To ensure credit score is not affected, one should immediately update any correction of any discrepancy.
B) Correcting discrepancies-
- 1st one should solve the issue with the bank in question. For example, if a debt has already been repaid but if the report doesn’t show it, the person should ask the bank to update the report as soon as possible.
- The bank also updates the credit agency regarding the required changes. However, if the bank doesn’t acknowledge the necessary changes immediately people take up the issue with the credit agency. All actions should be taken immediately.
C) Putting a priority check on the bill payments.
D) Using Credit cards in a smart and efficient way- Using credit cards is an excellent technique to improve the credit score but main concern is avoid late payments.
E) Net worth is the key factor- The ratio of credit and debt is directly proportional to credit score average, hence one should try to keep debt to minimum. Choosing the credit repair company plays a pivotal role to achieve the credit goals. Following points should be kept in mind to choose the best credit restoration company:
1. Credit repair company with experience
2. Company’s Better Business Bureau report
3. Watching out for companies that make impossible claim.
Some best credit restoration companies in United States are Lexington Law, Sky Blue Credit, DSI Solutions and Ovation Credit Services.