Credit reports and the importance of seasoned credit

Credit scores are compiled when lenders send information about their customers to the three main credit bureaus, and they keep track of it and, through some complicated math, turn the results in to a FICO score. The credit scoring system we have in this country may not be perfect, but it functions pretty well. The credit score is a simple index of how reliable an individual might be when it comes to lending them money to buy a car or truck, a home or to give them a credit card.

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A deficient credit score can be trouble if you were all set to apply for a home loan and you suddenly find out you can't qualify. If your FICO number is high, you can get favorable interest rates on car or truck loans, bank cards or mortgages. The useful FICO credit scoring system varies from 300 on the bottom end to 850 on the top end. If your score is low, you may have to pay a higher interest rate, or borrow from subprime lenders, or you may even be turned down for a loan altogether.

A fine start towards sound monetary health is to make certain that you start to make your payments in a timely manner. After a year or so of timely bill paying, your credit score will increase as you demonstrate that you are responsible. Some notations on a credit record, including unpaid debts or bankruptcy applications, will take a long time to eliminate, as they will stay on your credit report for seven years. Poor credit can be repaired, but there is no legal speedy repair. Fixing a damaged track record takes time and diligence.

Is it possible to fix your poor FICO score in a short time? Several businesses are introducing alternative fixes that purport to be able to increase your score by as much as 250 points in just 60 days!

Adding someone to a credit card with a good record adds "seasoned" credit to the cosigner's report. It isn't well known, but if you sign up as a cosigner on a charge card account of someone else, your own FICO ranking will be impacted by that status. The companies that advertise such dramatic increases have established a "network" of people with very good credit who are, for a price, willing to permit strangers to put their names on their accounts as cosigners. A percentage of the cost charged for this program is paid by the company to those people who permit their great credit history to be used in this way. The costs charged by one credit repair business vary from $1000-5000, based upon how many credit lines the customer wishes to "use." Once their scores increase, former customers are then persuaded to join the "network" in order to share their newly fixed credit.

It is unquestionably legal for anyone to add anyone else to their credit card account as a cosigner, as men and women add their husbands and/or wives to their accounts all the time. There is a tremendous difference between adding someone to your credit card to make it convenient for your wife to use your Discover card and doing so in order to allow a total stranger to qualify for a loan or mortgage for which he or she otherwise wouldn't qualify. There is some dispute as to the legality of adding a stranger to your credit card to raise their credit score. A lender may be fooled by seeing a FICO score that has been amplified using this technique, and they are risking a loan to someone who may not repay it.