Your credit is very important and lenders evaluate your overall credit risk when determining which loans and interest rates you qualify for. In the information below, you will be able to gain a better understanding of which factors determine your creditworthiness, and explore the many ways that you can improve your credit.
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Your credit score is a numerical summary of the information on your credit report. Creditors use this number to evaluate the information on your credit report and determine your credit risk. Your credit score typically ranges from 300-850. A credit score of 850 is considered perfect credit, and a score of 300 is considered an indication of someone who is a very large credit risk. -
You are legally entitled to obtain a free copy of your credit report from each of the 3 major credit reporting bureaus once every 12 months. It is a good idea to order all 3 reports if you are considering filing bankruptcy, but you don’t have to order all 3 reports at the same time, and you can rotate your requests and order one free report every 4 months if you don’t need them all to prepare for a bankruptcy. -
A credit report typically contains a history of every time you have borrowed money and details any time that you may have fallen behind or defaulted on a loan. It also reveals any collection actions, bankruptcies, or judgments to which you have been a party. -
Generally, creditors will offer you better loan terms if they consider you to be less likely to default on a loan, and higher rates if they consider you to be more likely to default on a loan. If your credit is very bad, it may be difficult to obtain any sort of credit or loan. -
Repairing your credit involves reviewing your credit history and correcting any errors or inaccuracies on your credit reports. It is your responsibility to make sure that the information on each of your credit reports is accurate. -
There are no magic fixes that instantly improve your credit, and significant credit improvements are usually the result of establishing a good payment history and paying down your debts over a period of years. However, there are several things you can do to give your credit a boost. -
Most creditors look at your credit history to determine the likelihood that you will make timely payments and pay off a future loan according to the terms of the credit agreement. Generally, creditors will offer you better loan terms if they consider you to be less likely to default on a loan, and higher rates if they consider you to be more likely to default on a loan. If your credit is very bad, it may be difficult to obtain any sort of credit or loan. -
Filing bankruptcy is not the end of your credit, but a new beginning. In fact, bankruptcy eliminates much of your debt and gives you a “fresh-start”. The credit rebuilding process can truly begin following a bankruptcy, and all of your debts discharged in bankruptcy should be reported as having a zero balance.
