A credit scoring system is one system used to assess risk to lenders, insurance carriers and credit card companies. An individual’s credit history and the ‘average age of your children’ may influence the amount of available credit used in choosing and assessing the lender. All factors that are ‘perfect’ for a fair and accurate rating will also be considered.
The National Research Council sponsored the American Economic Association (AIA) in support of Credit Default Scoring. There are ’92 organizations that co-sponsor research and certification programs on Credit Default Scoring to credit applicants. These organizations provide certification and training to financial institutions and other lending institutions that perform similar checks.
The credit default scoring system is currently being proposed by the credit scoring companies that will be rolled out to all applicants.
Here are some guidelines to follow while applying for credit:
‘ Be responsible in using your credit. It is NOT a good idea to use the credit score you get when you apply for a mortgage. No one “must steal” your credit score! (This is especially true when you have “borrower” grandparents or great-grandparent’s children who will have their own credit scoring software!)
‘ Your score is NOT held by all of your creditors. Your credit score may be used in assessing your risk, but only as a last resort.
‘ A card with no rewards is NOT your credit score. Although there ARE cards out there that accept cash or high points toward having a vacation or credit card, there is no ‘card guarantee’.
Your credit scores are a good starting point to decide whether or not to get a credit score.
In essence, credit default scoring is a system that will be the new “gold standard” in credit scoring. So what does it all mean?
The first major difference between the two systems is that most lenders will charge an ‘interest’ fee for using credit scores. This fee is a part of the overall cost of acquiring and obtaining a credit score. The fee is imposed to gauge risk on you in the market for a credit score. The fee alone is not your “silver bullet”, and you MUST get your score in the first place.
The second difference is that all credit scores require you to provide proof of income. Not surprisingly, this fee only applies to those people who can afford to pay their debt entirely off. You can charge no such fee to acquire and maintain your credit score if you wish.
So what does all this mean?
For starters, the credit scoring agencies charge their clients an interest rate of 4.9%. Obviously, this number will be low because most people don’t have the money to pay that bill.
Second, many scorers will be running up small charges. Your credit score may be 3%; but if your accountant reports to you as being under $75K, it is not an indication that you should charge more. The credit scoring agencies like to report the balance you owe to them so it makes sense that almost every one of these people will be charged a small or no fee at all when applying for and updating their credit.
It is all to say that your credit score is a valuable tool in helping you more fully understand what it takes to succeed in becoming a great and successful consumer.
Where’s My Vacation Money Good?
Almost everyone carries a balance of between two or three thousand dollars and three hundred dollars in credit card debt. Vacation money is the word that comes along many times a year as you return to your job and friends. When you have that debt coming, you may want to consider looking for money that can take advantage of it. Vacations can be quite costly, especially when you don’t have enough money to cover all the trips required. Vacations without a major event usually requires you to consider a couple of flights because of the travel demands.
If you have a great need for a vacation in the business related field, ask around at your local offices, or visit other companies and charities. Vacations can be expensive, particularly if you don’t have the luxury of having adequate funds. Vacations can cost hundreds of dollars and often require you to pay for your own accommodation. If you can find a company willing to offer a free trip to exotic destinations, visit their website, or call their representatives to schedule reservations and more than often at their local office. Vacation time is more of a free return than a free expense.