Credit

The credit score is a three-digit number, which is the measure of your credit worthiness. The credit score is calculated by using a mathematical model. Fair Isaac Corporation (FICO) scoring model is accepted as the standard method of calculation by most creditors and financial institutions.

5 factors affecting credit score

There are 5 factors on which the FICO score depends. By monitoring all the 5 factors, you can secure a good credit score. Check out the factors that affect the credit score, and know how you can keep them under your control.

Credit is important in our day to day life and we cannot move without it. The better is our credit; the better is the terms on which loans are offered. So we try our best to maintain a good credit score. Letters of credit are intended to help you to repair bad credit. Now, credit score depends on our credit report and so we try our best to remove negative items from our report as these items adversely affect our score.

Whenever a creditor considers a debt as a bad debt and deems it to be uncollectible, they charge off the debt. Mostly a debt is charged off by a creditor if you have not made any payment towards the debt for a continuous period of six months. However, some creditors also charges off an account if it is past due for a period of 90 days. “Charge off”, also known as “write off”, may prove costly to your credit score. Whenever, an account is charged off by a creditor, it gets reflected in your credit report and may lower your credit score by as much as 100 points.

Vacating a judgment means that the party (plaintiff or defendant) against whom a judgment has been passed can reopen the case with a view to turn the judgment in their favor. A motion to vacate a judgment must be filed within 30 days from the date you received the judgment notice from the court. However, if you did not receive the judgment notice from the court, the court allows you to file the motion within 180 days from the date you realized that a judgment has been passed against you.

Summon is generally a legal notice which the plaintiff sends when the borrower defaults on his payments and become delinquent. When the creditor sues the debtor and files a case, the defendant receives a summon which informs him the reason of being sued by the creditor. Once the defendant receives the summon, he has only 30 days to respond to it.

If you are highly immersed in debt and are not able to repay it back, you can go for a debt settlement program which allows you to repay only a portion of your outstanding debt to the creditors. Under debt settlement plans, you can negotiate with your creditors to bring down your debt to 40 to 60% of your outstanding amount and the creditor agrees to forgive you the remaining part of the debt. The most common debt that is generally settled under debt settlement program is the credit card debt. You can also settle auto loans, medical bills and personal loans under the settlement program.

Most of us face financial crisis at the end of the month from which we cannot recover without the help urgent credit. Payday loans come in handy during these times, because these loans help us to take care of these unexpected expenses till the time we receive our next paycheck. In spite of the fact that these loans have high interest rates, most Americans usually resort to these types of loans because of it easy accessibility.

When we apply for a new line of credit, the creditor asks for a cosigner to act as a guarantor to the loan. Mostly, the creditors need a cosigner with a good credit score to sign the loan agreement if the borrower does not have a good score to qualify for the loan. The Federal law requires the creditor to give a notice to the cosigner to inform him about his obligations towards the debt if he cosigns the loan agreement. Cosigning an agreement means that you are just letting the primary borrower use your credit history and by doing so you’re acting as a guarantor to the loan.

Bankruptcy is a legal process which helps you to manage your debts effectively under the cover of the bankruptcy court and helps you to make a fresh start on your finances. Once you file bankruptcy, all foreclosures, repossession and garnishment orders cease to operate temporarily. Generally, there are two types of bankruptcies which are filed by individuals. They are Chapter 7 bankruptcy and Chapter 13 bankruptcy. However, if you have a discharged Chapter 7 bankruptcy within the last 8 years or a discharged Chapter 13 bankruptcy within the last 6 years you cannot file bankruptcy.

Credit repair scams have almost become a regular feature. Everyday we find that credit repair companies claim that they will clear up your credit report and remove all negative items including bankruptcies and judgments for a fee, but they cannot deliver the desired results and end up taking huge fees. This is because nobody can remove negative information from your credit report if it is correct and so even after you pay hundreds of dollars to the credit repair companies, your credit report remains as it was before you have signed up for credit repair.