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Ten Things To Avoid In Credit Bureau Score | credit bureau score

A credit bureau score is a statistical measure of the chance that a client will default on a loan payment within the next twelve months, based on client s history as reflected by credit bureau information. Credit bureau scores are vital tools for managing and implementing efficient automatic decision programs, and significantly improving the analytical abilities of credit risk management personnel. Many people do not realize how important a good credit score is to their long term financial health. A poor credit score can seriously harm a person's ability to borrow money and buy necessities such as food, fuel, shelter, clothing, and education.

There are a wide variety of factors that are considered when calculating a credit bureau score. Three of the most important contributors to a score are usage, credit, and outstanding debt. The amount of usage is determined by the frequency of use of credit facilities and the total amount of credit that is carried on an individual or account. The number of accounts that are overdue or 60 days late is also considered. The average amount of outstanding debt is used to calculate a credit bureau score.

To get an accurate assessment of your credit risk, you need to know what these scores really mean. People tend to confuse credit bureau scores with credit scores from other companies. They are two different measures, although they use similar data to determine a person's credit risk. One is a calculation based on the answers to questions about current and past credit activity. The other calculates the risk based on the total outstanding debt of each account.

When lenders review your credit report, they compare it to the scores to make a determination of your creditworthiness. The only way to improve your score is to have your report reviewed by a lender. When they do find errors or omissions, they notify the credit bureau that they reported the information incorrectly. They explain the error and the corrective action that was taken. In most cases, this correction will lower your score temporarily, but eventually the errors will be corrected and your score will be calculated as before, not on an outdated basis.

When you file bankruptcy, your credit bureau scores drop immediately because bankruptcy destroys the files that contained all of your financial information. This includes bank and credit card accounts, auto loans and mortgages. Because these items are so important, credit bureaus have rules and procedures in place to prevent people from falsely representing their financial situation in order to obtain these types of accounts.

In addition to requiring loan applicants to provide proof of employment, lenders also check credit card application files for accuracy. Lenders will drop the scores of applicants who repeatedly lie about their credit card history or fail to disclose their bankruptcies or other financial problems. Lenders will also consider an applicant's level of debt, income, and other factors when determining whether they are a good candidate for a loan. Lenders use these scores to approve or decline loan applicants.

As mentioned above, some accounts are not included in the score. For example, open credit card accounts with balance amounts less than a specific dollar amount are not considered. Likewise, student loans that are still in collections are also excluded. In most cases, if you don't have enough information to remove the account from your report, then you won't be able to remove it from your score.

Credit scores aren't the only thing that lenders look at when evaluating loan applicants. They also consider an applicant's criminal background and any court records. Many lenders will refuse to work with someone who has had a past history of bankruptcy, drug abuse, or fraud if it shows up on a credit report. These accounts are not included in the credit bureau score, but they can still negatively affect the lender's decision.


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