Personal Credit Rating

A personal credit rating can affect an individual's entire life, from being able to buy a bicycle, a motorcycle, rent an apartment, rent a car, buy a house, start a business or get the money to go on a cruise. In the American economy, a borrowing history rating is the standard by which a person is judged to be trustworthy and honorable. Since the passing of the handshake and a person's word as being the standard bearer of integrity for borrowing, selling and promising, today's world of business judges a person on the cold hard numbers of their FICO scores or borrowing history rating. There are three major credit bureaus in the country, and each one issues a borrowing history score based on slightly different kinds of interpretation of the same borrowing information. The borrowing history reports issued by Experian, TransUnion and Equifax are the benchmarks for all decisions made about a person's borrowing worthiness.

Making a lot of money does not raise a personal credit rating necessarily unless the extra money is used to keep payments on time or accounts low. It's possible for a millionaire who doesn't pay on time to have a lower borrowing history score than the person who makes forty thousand a year and is a staunch on time bill payer. There are a number of factors that go into a credit rating that really begin with how on time a person has been with bill paying. Are there times when a bill when unpaid for more than thirty days or sixty days or ninety? Each one of those late payments begins to subtract from the premier score of eight hundred and fifty. Additionally, how much a person owes is also factored into a borrower's personal credit rating as well as how long a person has used borrowed money, how often a person has applied for loan money and what types of loans a person uses.

The federal government has mandated that each person with a social security number can get a personal credit rating history report once a year from one of the three major credit bureaus. Upon receiving one of these reports, an individual can look to see if there are mistakes on the report that might hurt a borrowing history score. The report might show closed accounts that should have been still been open. There may be other glaring mistakes that need attention. But there is one shortcoming with getting a yearly borrowing history report: each time a person requests his own history, it will lower the score slightly. And surprisingly, a borrowing history report does not have a FICO score attached.

The term FICO, the interchangeable acronym for a personal credit rating or credit score stands for the Fair Isaac Company. This company first developed the formula used for crafting a borrowing history score. Since the financial upheaval that began in 2007 and continues into the later part of 2008, the Fair Isaacs Company has announced a few tweaks in its formula. For example, instead of hurting a person's borrowing history score, applying for new accounts may actually boost one's numbers. Also, having high balances on cards could hurt more and actively using those accounts that are open can also be more important in actually raising the personal credit rating. Additionally, Fair Isaac says it wants to see people use more than one kind of borrowed loan which means seeing both revolving borrowed money use and installment borrowed money use, which will then raise the FICO score as long as the payments continue to be on time. Jesus has always made it clear in his earthly ministry that one of the marks that delineate His followers is obedience, such as "My sheep hear my voice and I know them and they follow me." (John 10:27)

Improving a person's personal credit rating is a process that cannot happen overnight. In fact, slow pays can remain on a person's borrowing history for seven years. So while improvements in a score can take place month after month, mistakes and past errors in judgment don't go away with a whisk of the wand. The bottom line in improving a borrowing history is to stop using loans and begin paring down the balances that have been accrued. Additionally, keeping older accounts open and in good standing are a good idea while closing them can actually hurt a score in some instances. Finally, opening accounts that are not intended to be used, such a department store plastic card account to get an extra ten percent off a purchase can also hurt a person's personal credit rating.

A FICO score can range from three hundred to eight hundred and fifty, with most people falling into the middle six hundred fifty range. A score of seven hundred and twenty or higher ought to be the goal of most consumers, experts advise. When all the formulae are erased and a person needs to know how to improve his own borrowed money rating or FICO, the simplest word to employ is wisdom. Perhaps a second word might be restraint and the third word would be knowledge. Raising a FICO score means that wisdom must be used when handling the privilege of borrowing money. Restraint must be used to reign in the temptation to use each card to its allowable ceiling and thirdly, knowledge is needed to know how borrowing history scores are created and that takes homework on the part of a wise loan user.

Add to: File Insurance Business article Teen Photo Images