Monday, May 11, 2009

GIVE YOURSELF SOME CREDIT

With a lot of talk about and proposed legislation to deal with credit card and mortgage concerns, one item of interest that is often overlooked is a person's credit score. Credit scores are used by lenders to estimate lending risk and predict whether or not a borrower will repay a loan. Your credit score is based on your credit report and history, and credit scores help consumers secure loans for mortgages, automobiles, credit cards and personal loans.

According to the Illinois Bankers Association, or IBA, a person's credit score can range from 300 (the worst) to 850 (the best). These scores are ranked by Equifax, TransUnion and Experian credit reporting agencies. A score of 700 or better is a good indication of financial health. The IBA lists payment history, credit balances, credit history, number of credit accounts and credit inquiries as the factors in determining your score.

So what can push your score down or up? The IBA lists several factors that will keep a consumer's score down and factors that will raise a consumers credit score. Factors that keep a credit score down are having too many credit inquiries, missing payments, making late payments, paying less than the minimum amount, defaulting on a loan overdrawn checking accounts, unpaid child supports, liens against a property, bankruptcy and foreclosure. Factors that can help a consumer improve his or her score include paying all bills on time, stay current on all loans, keep credit card balances low, not shifting debt around, pay off balances when possible and spread out loan applications and credit card activations.

The IBA also recommends that consumers be honest with creditors and lenders. The earlier a financial institution knows of a consumer's problem, the easier it is to correct the problem and fix a consumer's credit score.

If you are interested in checking your credit score, here are the agencies contact information:

Equifax: 1-800-685-1111 or www.equifax.com
TransUnion: 1-800-888-4213 or www.transunion.com
Experian: 1-888-397-3742 or www.experian.com
Illinois Bankers Association: 1-217-789-9340 or www.ilbanker.com

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