The Fair Isaac and Co. is the renowned developer of what in financial circles is known as the FICO score. A FICO score is a procedure or a methodology that gives a fair idea of whether users of credit will pay their outstanding bills. It was in the 1950’s that Fair Isaac, began working on a scoring method that would make the lives of lenders much easier. Over a period of time, this has indeed become one of the most reliable methods by which credit can be evaluated. The credit history of a borrower is generally lengthy and very complicated. What a FICO score aims to do is shorten it, into a solitary number.

The process of calculation of the FICO score is complex as it tries to integrate many models of evaluation. In the process of evaluation, all information about the finances and credit history of the borrower are given specific points. This is done by using various models and mathematical tables, and making a study of millions of cases involving the use of credit, by various people. As can be seen, FICO scores predict the future and this is why different sources of data are used to come up with effective credit forecast.

Some of the prominent factors that are taken into consideration by FICO scores are the employment history of an individual, the number of late payments, the time he/she has spent at the present residence, negative credit information such as bankruptcy.

There are three types of FICO scores that are generally computed using the data given by three bureaus. They are Experian, Trans Union, and Equifax. Lenders can use any one of the three scores but many lenders use the middle score.

Though some people berate the FICO scores, the fact is that these scores are quick and very fair. FICO scores and credit reports play a very important role in securing you a home loan. As a result, the FICO scores have gained tremendous importance as far as loans is concerned. It is important to have a high FICO score.

Therefore it is of high importance for people to repair their credit. They can do this by keeping all revolving debts below 50% of the permissible limit. If your accounts are paid off, do not close them but rather just stop using them. The one way you can do that is by paying your bills on time. Another thing is that you must not apply for credit on a regular basis. One of the primary points to consider is that a limited credit can adversely affect your score. So try getting additional credit.

This might look a little difficult but the real truth is that there are many ways to get finance for your home. You can have any credit rating or FICO score, all you need is a little bit of credit repair and numerous options open up.

You can’t imagine going a day without it. Using it gives you a short-lived adrenaline rush that soon fades to feelings of remorse and guilt. It strains your finances, and keeps you awake at night wondering how you will continue paying for it.

It’s soul searching time as you look at yourself in the mirror and admit that you are addicted….to your credit card.

Credit card debt in the US has increased from 238 billion in 1989 to over 800 billion in 2005. An entire generation is being transformed into virtual slaves to a tiny piece of plastic. How did we get to this point, and more importantly, what can we do about it.

The combination of easily available credit at deceivingly low interest rates, the incessant barrage of marketing messages encouraging people to live above their means, and the stagnation of wages, have conspired to create a credit crisis that threatens to undermine the foundations of our economy.

The days of delayed gratification are a quaint memory as we rush to fill our McMansions with the latest electronic gadgets and trendiest furniture to maintain the appearance of wealth. The irony is if you look past the veneer of success in upper middle class neighborhoods across the country you will find a community of people filled with angst as they sink deeper into a cycle of debt trying to keep up with their neighbors who are doing the same thing. The average American family carries a monthly balance on their credit card of almost $10,000.

It’s time for a collective “Credit Intervention” that forces us to face reality and admit that many of us cannot afford to live the life we are living. Once we do this we will be prepared to start down the three step road to recovery:

1. If you can’t afford it, don’t buy it. You can watch the same game on a regular TV as you can on the latest 60” high definition plasma that you will be paying for until Superbowl XXXXXX.

2. Pay off your credit card balance each month. Paying your full credit card balance each month is the same as getting an interest free 30 day loan from the bank.

3. Grow your own portfolio, instead of the profit margins of the credit card companies. Every dollar you give the credit card companies in interest payments is one less dollar for you to invest in your future.

Admittedly, these steps are easier said than done in today’s hyper consumer driven environment, and certainly there are people in emergency situations who have no choice but to use credit cards to feed their families, and pay their medical bills. However, too many people look at their credit cards as a shortcut to a better life. This mentality needs to change or many people won’t be able to retire, and the only thing they will be able to leave their heirs is a legacy of unpaid credit card bills….and maybe a broken down 60 “ plasma TV.

By know, you know that too many inquiries can hurt your credit score. If you are trying to get a credit card with a really good rate, you may have been shopping around for a while so that you can get the best possible deal. Chances are, you may have found a few different cards that you like, but there were a couple of things that you did not like about each one. Sometimes, you will find one that you like but you have to pay an annual fee. Other times, you will find one with no annual fee but there will be really high late charges or other miscellaneous fees.

However, you should not be applying for all of these cards. Looking through all of the terms for each one of them is one thing, but applying for all of them is another. Were you aware that making a number of inquiries could actually hurt your credit score? Well, it can and could actually end up doing quite a bit more damage than you would think.

The truth of the matter is, every single time that you apply for a credit card or inquire about any type of a loan or store credit, the information will show up on your credit report. This is called a "hard inquiry". A hard inquiry can actually drop your credit score by several points. Many times, people will apply for different kinds of credit while they are completely unaware that the inquiries are going against their credit score. It is actually too bad that this information is not given to these individuals up front so that better choices may be made.

Another common misunderstanding is that requesting a copy of your credit report can actually hurt you. However, this type of an inquiry is called a "soft inquiry" and should never count against your credit score. If this kind of error ever shows up on your credit report and it is showing against you, it is very important that you go through the steps to resolve the error immediately.

Mortgage Inquiries

The credit reporting agencies have made one exception knowing that today there are so many mortgage companies you can go to for a home loan. They have made it that multiple mortgage inquiries made within 14 days are treated as one inquiry. You should try to do all your "rate shopping" within a 30 day period. These inquires are generally not counted against your score.

Many creditors will look to see the exact amounts of credit inquiries that you do have on your credit report. Depending on the guidelines of each creditor, four or more inquiries within a certain time frame of six to nine months can be considered to be quite an excessive amount. If they do deem this amount of credit inquiries as excessive, they could end up denying your credit request. This request and denial will then show up on your credit report along with any others that you may have. All of these inquiries will hurt your credit score. So choose what you apply for carefully and really think about whether or not this new credit card or loan is worth dropping your credit score by a few points.

You can learn how to fix bad credit yourself, without paying an attorney or some so called “credit repair specialist” a single dime. And you can do this yourself; you just need to learn how.

As a mortgage specialist in Colorado for the last twelve years, I have worked with people with all types of credit and, in the process, I was able to determine what actually worked and what did not when trying to get credit reports corrected.

Many people simply do not know what to do or where to go to begin the process.

To fix bad credit yourself, you must first get a copy of your credit reports from the three major credit reporting agencies (also known as credit bureaus).

The three credit bureaus are names you have probably heard of; TransUnion, Equifax, and Experian (formerly TRW). These three credit reporting agencies have a lot of mystery surrounding them, and they like to keep it that way. I would like to correct that misconception.

The three credit bureaus are nothing more than glorified record keepers. Also, remember this. Since the three credit bureaus did not lend you any money, they are not as concerned as you are if the information they have is accurate or not. They are merely paid to store and retrieve that information.

And with the amount of information flooding into the three credit bureaus on a daily basis, you can see why there is a 70% chance that the information in your credit report is erroneous.

So your first step to fix bad credit yourself is to get a copy of each bureau’s credit report so you can see what type of records they have on you. There are hundreds of places available on the Internet to get copies of your credit reports, and most of them are useless if you want to fix your bad credit yourself.

Think about it. The credit reporting bureaus do not make a dime when honoring their responsibilities under the Fair Credit Reporting Act.

On the contrary; the credit bureaus are required by law to investigate all disputes requested by consumers. This costs them millions of dollars each and every year.

To help cut costs and save money, the credit bureaus do things that you need to know about. Mainly, they sell you what you don’t need, and hope that you give up in frustration.

You get copies of your credit reports off of the Internet. You try your best to start a dispute and you find it impossible to do.

You then spend more money on additional reports, but you still cannot initiate a dispute. You get frustrated, and then you give up.

Congratulations; you have just saved the credit bureaus a ton of money.

Remember, the credit bureaus are private companies and operate as such.

Therefore, you will have to deal with the credit bureau reporting agencies directly. It is not difficult, though it will cost you five to ten minutes on the telephone dialing each bureau’s toll free 800 number.

If you have recently been denied credit, then you have a right to a copy of your credit report for free. Also, you have the right to request a personal copy of your report once a year for free as well.

When on the phone with the three credit bureaus, make sure that you receive a “number” with each report. With TransUnion, it will be a “File Number”; with Equifax, it will be a “Confirmation Number”; and with Experian it will be a “Report Number”. You will need these numbers to begin correcting your credit reports.

If the credit reports you order do not have a “File Number”, a “Confirmation Number”, or a “Report Number”, you will have a very hard time trying to fix bad credit yourself.

Have you ever wondered why credit for students is so easy to come by? Well, often times credit card companies will send out mass mailings to invite new college students to sign up for their services. Usually, there are even a number of these agencies waiting to sign them up right at the open houses or orientation days right on the campus. The main reason for this, while some may think it to be sinister, is just to begin helping some of the students build on their financial future. After all, you cannot get good credit without credit, and these companies are offering a way for students to get their first card to start them on their way.

Unfortunately, even though these cards are issued with the best of intentions, the outcome is usually pretty grim. A large, almost staggering number of these first time credit card holding students will end up misusing their cards with the end result of not even being able to keep up with their minimum payments. Because of this, it may actually be a good idea if there were a bit of credit counseling that could take place before every potential sign up. Once the students have a better idea of how to use their cards to their advantage, they can avoid the problems of debt, which could end up hindering their financial future for years to come.

Can you just imagine how frustrating it must be for a young student to be dealing with credit card debt along with all of the costs of campus living and all of their student loans? Such a hefty amount of money being forked out every single month can put a dark cloud over the entire idea of credit for students.

Certainly, the best way for students to live smart with their credit cards is to first gain an understanding of how their particular account works. Know what your late fees are, pay attention to the date that your payment is due and always pay it on time. It can be easy to overspend when you have a credit card. This is why it may just be smart for students to only use their credit card for books or school supplies. Limiting your use can help you keep your balance down, while helping you maintain a minimum payment that is manageable.

Some students may even have their parents tell them that they should never spend over the amount that they can save up to pay off at the end of the month. This can help you a great deal by not having any extra interest of fees. Credit for students can be a wonderful thing as long as it is used correctly.

A Bit of History

In the past, due to a more strict regulation of the financial business, a shortage of funds in the financial system and most importantly lack of ideas, there were only loans available to satisfy the needs of those with good or perfect credit. Those with bad credit had almost no way of getting finance other than resorting to family and/or friends.

Not so long ago, non traditional lenders (mostly individuals with no experience in the lending business) saw the opportunity to make money by lending within a niche that traditional lenders had left abandoned. But since lending to people with bad credit has risks, many went out of business. Those who where left, tailored what are currently bad credit personal loans; qualification and approval haven’t changed much since then.

Nowadays financial institutions too have discovered that lending to people with bad credit can also be a good business and the competition has made bad credit personal loans widely available. Qualifying for a bad credit personal loan has become increasingly easy and almost the only difference between regular loans and bad credit loans is probably the interest rate.

Bad Credit Personal Loans

Even though it’s now easier to get finance, there are many things you need to know before rushing in to apply for a personal loan if you have a bad credit score. The main thing you need to understand is that the lender still wants to recover his money plus interests. He is just taking a higher risk by lending to you if your credit is bad but he will try to reduce that risk to a minimum.

Thus, in order to qualify you’ll either have to provide some kind of collateral (like a house or a car) or you will have to show him that you have an income suitable for facing new debt in the amount you want and that you want to fix your bad credit situation by modifying your credit behavior. A recent credit history of payments on time and lack of missing payments will aid approval even if your past credit history shows delinquencies.

Bear in mind that you will have to face higher interests than with regular loans and that with a limited income this can be a heavy burden. So, request the smallest amount of money possible to cover for your urgent and necessary needs only. There will be time to borrow higher amounts when you have recovered your good credit stance. You’ll then be able to get finance in better terms with higher loan amounts, lower interest rates and longer repayment programs if you want to. Just grab this opportunity and take advantage of the benefits of raising your credit score by paying your bad credit loan installments in a timely manner.