credit report - Myths and Truth about Credit Scoring

Credit score is the key factor determining approval of almost any type of credit. It is based on the information contained in your credit report files. The widely used FICO score was developed by Fair Isaac Corporation, and it is a formula which assesses your potential credit risk. The information used to calculate credit score can be broken down into five major parts. Your payment history with banks and other lenders will account for 35% of the score, the amount of money you owe for 30%, and the length of your credit history for 15%. New credit and a statistical assessment of how healthy your credit mix is will both account for 10%. Credit score is not based in any way on the following information: - references to debt management or credit counseling programs. - person's marital status. - current employment status, including how long with the same employer. - credit report inquiries made by you, employers, insurance companies, or banks if made without your knowledge. - what interest rates are charged on your credit cards, etc. - public assistance received. - person's age. - child or family support received. You can increase your score by: - always paying bills on time. - paying off or reducing credit card and other debt. - keeping old, unused credit cards, departments store cards and other "revolving" credit accounts open, even if you don't use them. - not applying for credit very often. - correcting mistakes on your credit reports. Banks decisions are made according to their own standards. While the majority of lenders use credit score as a key factor in approving credit, other facts play their parts as well, among them: your income, employment status and length of time at present address, to name a few. Each bank has its own standards. What score is acceptable for a particular loan or credit product depends solely on a lender. The person's credit score might not be high enough to get credit with one bank, and perfectly acceptable with another. More about credit score and tips on improving your credit can be found at: How Much? - Comparing financial products. Senior staff member for How Much? http://www.howmuchanswers.com/ Article Source:http://EzineArticles.com/?expert=Simon_Fox credit report - Building Business Credit Most businesses want to be able to borrow money when they need it, without the owners having to personal guarantee the loans. This means less risk to the owners. Hoping to get a business loan without a personal guarantee is one thing and actually obtaining it is quit another. Too many business owners come to us last minute trying to obtain additional financing. We are constantly approached by business owners asking how to obtain business financing, and more importantly, how to obtain it without a personal guarantee! We watch as successful businesses are turned down for financing because they haven't taken the time to set up the business credit properly. More vital is after the business credit is set up, who should the business contact to get financing? Let me also say one thing, there is a common misconception, good business credit will overcome bad personal credit. In most cases, this is simply not true. It is important to have good personal credit and good business credit. Let's face it, banks are not donation centers! They will be looking at both the business credit and the personal credit of the owners of the business. Just because a business owner has great business credit doesn't mean that the bank will completely ignore the negative personal credit. Part of building a good, solid business is taking care of both business credit and personal credit. Although, building business credit is totally different than building personal credit. With business credit you will need to make sure that you have a proper business entity set up. You will need to make sure it is a real business. By that I mean it should have the proper licensing and permits to operate in your local jurisdiction. You will also need to have a real address. Not a P.O. Box! You will need to set up the phone number properly so that the business credit bureaus can verify that you really are in business. You will need to do business with companies that report to the business credit bureaus. There are over 500,000 companies that extend credit and less then 10,000 actually report to the business credit bureaus. If you are doing business with someone who doesn't report it does nothing for establishing trade references. The best advice that I can give is start now! The point that your business needs the money is not the time to start building business credit. Start before you need it so when you need it it is available. Remember, the most important part of building and operating a successful business is laying the foundation and business credit is part of that foundation that needs to be set up properly in the beginning. Let me give a couple words of warning! 1. Don't try and buy credit. There are a few companies that will try and sell trade references for a large sum of money. This is a rip off and as soon as the credit bureaus find out they will put your company in "High Risk" status. 2. You don't need to spend large sums of money on "Shelf Corporations" or "Aged Corporations," shelf corporations have their place and can be a benefit, but you can also build business credit and obtain financing to a brand new corporation. 3. Don't try and substitute good business credit for bad personal credit. Spend the necessary time and money to repair your personal credit while building your business credit. Do yourself a favor and start building business credit the right way so when your business needs financing you know where to go to obtain it!