Credit Rating Debt - "Secrets"

What an interesting name for an article. What does that even mean? "Credit Rating Debt". I think the term actually will sum up the entire purpose of this article. How is credit rating calculated, what hurts your credit and what helps it? When do credit card companys report to the credit bureau about how good or bad your account is.

Even worse, there is a new sensation going around that is becoming more and more popular for large businesses. What is this sensation and how is it hurting peoples credit reports when they are paying all their bills on time? Lets find out.

Quick Disclaimer

I am no expert on your personal finances or how you should manage your money or credit line. The purpose of this article is to just share knowledge with you on whats going on behind the scene. While working for several credit card companies I was able to learn things that are not any "big secret" but were a bit of an eye opener for me personally. With that out of the way lets discuss the wonderful topic of... *pause for effect* your credit rating debts.

Is it possible?

In todays society, especially with the recent economy changes, good credit rating seems to be hard to achieve. Developing a game plan to get good credit is beyond the scope of this article. What we can achieve though is how to avoid the nasty pitfalls.

The Basics

Your credit rating is monitored and set up by one of the four credit giants known as:

• Equifax
• Experion
• Trans Union
• Innovis

Period, Anyone else that is offering a free credit report or wants to set up a annual fee to see your updated credit line is a third party going through one of these companies.

Update: Some "experts" claim there are only three companies, I assure you there are four.

Credit Scores

You can request to have your credit report mailed to you. The price for this is usually 7 - 14 dollars depending where you go. You are entitled to one free credit report each year. Your credit report has a lot of information including address and employment information. It also gives you a credit score which usually works out roughly to the below values.

• 300 - 650 Below Average Credit
• 660 - 750 Good Credit
• 760 - 850 Excellent Credit

The Rules To Follow to Avoid - "Credit Rating Debt"

Okay so here is a few things to remember. None of these should be taken as dogma, I don't know the situation your living right now. However, keep these in mind when you run into them, it can save a lot of headaches.

Never apply for or own third party credit cards. (wallmart, starbucks ect)

These cards are becoming all the rage with large companies now. They are constantly trying to sign you up for these third party credit cards. Now, being accepted for a credit card is not going to hurt your credit rating. Being accepted for 7 cards from 4 different companies plus a few from x company and a visa from y company makes you look like a credit seeker. This hurts your credit rating immensely. Companies have no problem getting free advertising in your wallet by sticking their logo on your MasterCard, what they don't tell you is that getting their card is just going hurt you in the long run. If you need one, get a credit card through your bank or through a company that deals strictly with just plastic, such as American Express or Capital One. I am not endorsing any of these companies just giving examples.

Be careful how you set up your card, who you list as your primary or secondary or your Authorized users.

This should be an obvious one but for some reason it isn't. Even when you are not financially responsible for a credit card. (Authorized User) You are still reported to the credit bureau when that card goes into collections.

Hard Taps and Soft Taps To a Credit Rating

When you request to see your own credit rating this is considered a "soft tap". When an employer wants to see your employee history to hire you. (more common in the USA) this is usually a "soft tap" (make sure it is). When you apply for a loan on a car or a mortgage on a house, welcome to "hard taps". The only difference between the two is a soft tap gives less information and doesn't hurt your credit. Multiple hard taps give alot more indpeth information about your spending habits and multiple hard taps close to eachother can really hurt your rating. Before you sign anything allowing someone to check your credit rating know the difference between the two and keep track how many "hard taps" your getting a year.

Pay your bills

Pay your bills. Pay your credit card bills, your bank loans (school / mortgage) and even more important, always pay your phone / cable / internet bills. Your friends won't report you to the credit bureau for a late payment. Comcast has a whole staff employed to do just that.

That's it for now.

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