Do You Know What Credit Score Says About You?

Many times after a life altering event paying bills can become difficult, Brian Daniel understands this is a common issue for many people. Brian Daniel, a Dripping Springs bankruptcy attorney, wants the best for all his clients, however, this article is not just meant for his clients that are facing bankruptcy threats. This article is meant to help anyone who wants to improve their credit score.

Balancing the AccountsCREDIT SCORE: What Is It?:

There are three major credit reporting bureaus (Experian, Equifax, and TransUnion). This is why credit counselors, loan providers, etc. often use the term “pulling all three reports.” All three credit bureaus have only a part of your “credit story,” accurate or not. These credit reporting companies generate reports about you that reflect your credit worthiness. They do this according to the banks, credit cards, and collection companies working with you. The credit reporting bureaus compile your credit history and report the promptness of your bill payments.

Your FICO score is the financial standard that is most relied upon to rank you compared to others. FICO stands for “Fair Isaac Corporation” and is a credit risk calculator.  This number is based on a combination of factors, some of which are unknown because they are considered trade secrets. However, we know that your FICO score is largely based on your payment history, the length of your credit history, and even the type of borrowing that you have done.It takes information from the three credit reporting bureaus and provides a snapshot of your credit risk to potential lenders. FICO scores range from a low score of 300 to a maximum score of 850. Very few folks actually have credit scores in the 800s. FICO reports that as of 2006, sixty-percent of the nation’s population had scores that were between 650 and 799, with the median at 723. People with scores in the high 700s are considered to have good credit and people with scores in the 600s have poor credit.

This number is based on a combination of factors, some of which are unknown to most because they are considered trade secrets. However, we know that your FICO score is largely based on your payment history, the length of your credit history, and even the type of borrowing that you have done.

This score can affect your life, lenders perceive people with higher credit scores as easier to work with than people with poor credit because it is less likely that they will default on their loans.

For Example:

When a lender sets out to select a customer, one major factor that they consider is the likelihood that they are going to get paid back. For a lender, the perfect customer is one who pays month after month until the loan is paid back. In that situation, the lender recovers a profit from the interest paid on the loan.This score can affect your life, people with poor credit scores have less lenders.

Improve your credit score:

1) What to Avoid:

Accordingly, you know that after you have been injured in a car crash and have lost work wages, you should avoid opening up additional credit card accounts, borrowing more, and nonpayment of your bills.

2) Better Alternatives:

It is highly recommend that you hire a financial planner to help you achieve your long-term financial goals after your car accident. In general a financial planner’s advise is to pay down debt, fully maximize tax deferred IRAs, and to place 10% of your monthly income into savings. If you don’t have the resources to do such, when you are facing a post-injury cash flow crisis, funding your IRA is much less important than avoiding foreclosure.

a) Continue paying your creditors/lenders that report

b) Do not hoard your money

c) Borrow from sources that don’t report

c) Communicate, communicate, communicate:

You should take the initiative write letters to creditors and landlords that explain the status of their cases. Try to contact the accounts receivable representative at utility companies, the IRS, the State Department of Revenue, the cable company, and anyone else. You should tell them that you ultimately want to bring your account into balance and offer them at least a small payment. Or, you can at least provide a date when you will be able to pay something.

profilephoto-mobileIf you are facing a financial struggle and worried that because of a recent injury you are unable to pay loans or are facing bankruptcy it is important that you seek out a Dripping Springs bankruptcy lawyer. Brian Daniel is a bankruptcy lawyer who has a lot of experience helping individuals who find themselves struggling in debt. Don’t stand alone in your debt. Brian Daniels is a dedicated bankruptcy attorney who is willing to help you the best way he can. Call today at (512) 615-3569

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