Concern for Individuals with Low or No Credit Scores

by Karen S Mueller, President of RepairCreditFacts.com

In the United States, more credit records or transactions in the credit bureaus' databases for you, means there is a better potential for establishing higher credit scores. You are considered a better credit risk, if you obtain and maintain high credit scores, as compared to those who have incurred no credit records at all.

It is a popular belief that having a high credit score indicates you are very responsible for handling your finances. Moreover, good credit scores equate to keeping up your integrity. To sum it up, a high credit score can equal a good reputation.

Who does not want to earn a good reputation? If you ever need to apply for any credit program and you wish to see an “approved” mark on your application sheet, then you must avoid the following:

1. No Credit Score

Having no credit score at all denotes that lending institutions will not have any basis on how you handle your finances (even if you are good at it). The credit scores are lending institutions determinant to approve your credit request since they cannot gauge your financial history by:

? - Race and origin. Lending institutions will not approve your credit request because of race, color, creed, religion, sex, etc. There are laws prohibiting such discrimination.

? - Type of employment and salary. Even if you are a janitor and have a high credit score, then your loan application might be approved over a company manager who has zero credit records.

? - Education. Whether or not you have obtained a college degree does not matter. What matters is a high credit score.

Lending institutions cannot measure approval of your credit request according to your religion, age and marital status. This is due to its being subjective. The Equal Credit Opportunity Act sees that the most objective determinant is in looking at credit scores.

Through credit scores, lending institutions will get familiar with your financial background. They will find out the previous and present loans you have, the down payments you have doled out, the interest rates you choose, and most importantly, the payment scheme that you have established.

2. Low credit scores

There are major institutions in the US, known as Credit Bureaus, that determine if you are suitable to be given credit. Equifax, Trans Union and Experian are major institutions who compute a borrower’s credit score. All three have their own distinct computing system which adheres to law and each computes a national average credit score. In December 2007, Experian considers it 692.

If your credit score falls below 600, then you are highly likely to see your credit applications with “disapproved” marks. Above a 700 is considered a very good credit score today.

Using credit is not a bad thing. In fact it is a good thing. A low credit score reflects that you have been immature on handling financial matters. You need to take action to raise your credit score.

A credit card may be handy when cash is not readily available. Some find credit cards safer to carry than stuffing cash in their wallets or using a debit card which can be a danger in itself.

Loans are equally important as credit cards to establishing good credit. They are especially useful for those individuals who wish to own properties for which they cannot immediately pay, like homes and cars.

With the significance of needing ready forms of credit today, it is helpful to get good if not high credit scores. There is nothing hard about getting high credit scores; all you need to do is be responsible in handling your finances. By doing so, credit will not be a nuisance but will serve as a great aid to you.

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