Tag Archives for " Consumer credit "

Credit Services: Experian

“There are lots of credit services out there. In this article, Experian explains what sets them out from the rest. Read it now!”

Top Credit Services

Credit Services provides information to organisations to help them manage the risks associated with extending credit to their customers and preventing fraud.

Experian has developed core expertise in building and managing very large and comprehensive databases containing the credit applications and repayment histories of consumers and businesses.

Consumer information
Experian operates 19 consumer credit bureaux, maintaining information on close to 800 million consumers. Our goal as a consumer credit reporting agency is to help lenders make better informed and faster credit decisions through access to detailed historical information about how consumers have fulfilled their credit obligations.

Experian’s clients are drawn from a wide range of industry sectors, where organisations routinely extending or offering credit to their customers, such as financial services, telecommunications, utilities, retail and insurance.

Our credit reports vary by country, but typically include identity data, transactional data, past and present credit obligations, court judgments, bankruptcy information, suspected fraudulent applications, collections data and previous addresses.

In the more developed credit markets, such as the US and UK, a credit report includes both positive and negative information. Positive data includes accounts that have been paid on time, forming a complete view of a consumer’s financial behaviours, while negative data includes past-due payments, collections accounts and public record information such as bankruptcies. In emerging credit markets, consumer credit reports often contain only negative data.

Experian does not make lending decisions or offer any comment or advice on particular applications, but simply provides factual information. This information is used by lenders throughout the customer life cycle:

Prospecting and origination
At the prospecting stage, where regulations permit, credit reports are used to identify consumers for pre-approved offers of credit.

At the application stage, credit reference checks are undertaken to verify the applicant’s identity, to assess credit risk and the potential for fraud, and to set the terms and conditions of the credit offer.

Account management and collections
Changes in a consumer credit report often indicate change in the risk or opportunity presented by existing customers, helping lenders to drive account management and retention programmes.

Experian’s credit reports also help improve the return on collections processes by optimising collection efforts, locating debtors and confirming and updating contact details. More at Credit Services

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How to Increase Credit Score

“Looking for ways on how to increase credit score? Let this article help. Read it now!”

How to Increase Credit Score

Most New Year’s resolutions require consumers to spend money, but here’s one that actually doesn’t cost anything and ultimately helps people save: Boost your credit score.

Low credit scores result in higher interest charges for all types of debt, including credit cards and home loans. Borrowers with a FICO credit score (the score used for most consumer lending decisions) of 700 save an average of $648 in interest on their credit card, $1,392 on their car loan and $2,340 on their mortgage each year, compared with borrowers who have scores below 620, according to a study by CardHub.com , a credit-card comparison website. Those savings get even larger for borrowers whose credit score is above 700. Separately, lower scores can lead to larger home and car insurance bills and make it harder to rent or buy a home.

Fortunately, there are ways to improve a low credit score and most involve scaling back on credit-card usage. That’s because in the world of credit scores, all debt is not treated equally. FICO scores tend to drop as consumers rack up more credit-card debt but don’t decline as much if someone signs up for a student loan, car loan or mortgage. Here are five steps to improving your credit score.

Pay down credit-card debt
To improve their credit scores, borrowers need to lessen their credit-card debt.

Once a borrower surpasses a 10% “credit utilization ratio” — that is, the amount of their credit card debt in relation to their total spending limit — their FICO score will likely drop, says John Ulzheimer, consumer credit expert with CreditSesame.com, a credit-management site, and a former manager at FICO. For instance, borrowers whose credit-card spending limits total $10,000 should not surpass $1,000 in debt — whether or not they pay off their balance in full each month.

That can be an onerous task for many borrowers. They’ll need to adhere to stricter limits if they want the highest score possible. According to FICO, borrowers with the best credit scores — of 785 or greater — use an average of 7% of their total credit-card limit. In contrast, student loans, car loans and mortgages are not considered by the credit-utilization ratio.

Consumers can consider asking their card issuers to increase their credit-card limits, which could in turn increase their credit score. Of course, that will require not swiping for more purchases on those cards.

Convert credit-card debt to personal loans
Borrowers with a lot of credit-card debt aren’t out of luck. They can actually improve their score before they even pay down their debt — with a bit of strategizing: They can consider rolling their credit-card debt into a personal loan.

Here’s why: Credit-card debt tends to be more damaging to credit scores than a personal loan, which is considered installment debt. The credit-utilization ratio (see previous section) does not take installment debt into account. This strategy would result in zero dollars of credit-card debt on the borrower’s credit report, which could boost their score by 100 points or more, says Ulzheimer. They’ll also pay lower rates to boot: The rates on personal loans currently average 11.36%, according to Bankrate.com. In contrast, rates on credit cards average just over 13% to 15.4%.

This strategy will only help borrowers if they stop using their credit cards or if they pay off the charges they make on their card quickly. Otherwise, their score won’t stay up for very long. Of course, consumers should pay off all their credit-card debt with their savings rather than signing up for a loan. But that assumes they have enough cash set aside after paying this debt for their emergency fund. (Financial advisers typically recommend people have savings equal to six to eight months of living expenses in a savings account.) More at 5 ways to boost your credit score

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What is a Good Credit Score

“You might have asked yourself, over and over, what is a good credit score? Let us help you answer that question. Read more now!”

Determining What is a Good Credit Score

When it comes to your credit, it’s important to know how you stack up. Do you have good credit? Excellent credit? Poor credit? How can you find out? In most cases, the easiest way to determine the health of your credit is to look at your credit score, a numerical value that reflects a mathematical analysis of your debt, your payment history, the existence of liens or other judgments, and other statistical data collected by the credit bureaus. In other words, your credit score is the compact, simplified version of your entire credit history, all rolled up into one tidy three-digit number.

Why Do You Need Good Credit?
The importance of having good credit can’t be understated. From helping you get a loan, to qualifying you for a great job, good credit simply makes life easier and less expensive.

In the eyes of lenders, employers, insurance agents, and a host of other people and entities, your credit score represents how responsible and even how ethical you are. For example, lenders look at your credit score to determine not only your ability, but your willingness to repay a loan. Insurance companies view an individual with a good credit score as someone who is trustworthy and less likely to commit insurance fraud. Employers look at credit scores as a way to determine whether a candidate will be a dependable new employee.

A bad score, however, can prevent you from being able to purchase a home, work in certain industries, and will wind up costing you a bundle in higher interest rates and fees. However, if you understand what hurts your credit score, you can make an effort to fix bad habits and improve your credit rating.

The Three Major Credit Agencies
Experian, Equifax, and TransUnion
There are three major credit agencies that provide consumer credit information (including credit scores) to the majority of interested parties: Equifax, Experian, and Transunion. Each reporting agency collects information about your credit history from a variety of sources, including lenders, landlords, and employers, as well as other sources. These includes public records, current and past loans, your payment history, and other data. They then rate your performance using a proprietary scoring system to come up with a credit score.

Because each agency may access different information and has its own formula for calculating your creditworthiness, it is not uncommon for someone to have three different credit scores.

Understanding Credit Scores
Your credit score is a three-digit number that, without context, may mean very little to you. Here is a breakdown of how lenders, insurance agencies, and employers all view your credit score:

Excellent Credit: Credit Score Above 800
If your credit score is above 800, you have an exceptionally long credit history that is unmarred by things such as late payments, collections accounts, liens, judgments, or bankruptcies. Not only do you have multiple established lines of credit, but you have or have had experience with several different types of credit, including installment loans and revolving lines of credit. You generally have a stable work history, usually with one company. More at What Is a Good Credit Score – Understanding Credit Ratings & Ranges

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