Chris Duncan asked:




Credit Rating Agencies are suppose to provide an unbiased, objective rating on various instruments that an investor can partake in. Over the years they have done a pretty good job. Unfortunately, much of the current turmoil is due to agencies giving high ratings on debt instruments that were really too complex to understand and weighted ratings towards the high end on an assumption of future growth.

Wow, I almost sound like one of them. That is really scary. In English then. Credit agencies were giving very high marks for the bundled debt that banks were selling. Packages were put together with large amounts of good loans and some riskier loans. The problem was the assumption was that even if the riskier loans went bad, the asset (usually a house) would be able to be sold for more than it was originally purchased for. And of course that lasted for quite a few years. But then some of the loans (I almost wrote loons) started going bad. And then a lot of them. Finally, home prices started to drop dramatically and it was a downward spiral from there. So why is this important, well you need to take ratings with a grain of salt and sometimes you might want to do some of your own digging.

My focus is going on ratings for municipal offerings. Moody’s and S&P (Standard & Poors) are the most common. Some municipalities will also use Fitch. It makes you wonder if the municipality doesn’t shop around for the one that will give you the highest. But thinking like that makes the black hats come out and I try to avoid that. Moody’s highest rating is triple A (A a a). Yes, it is shown as a capital “A” followed by two lower-case “a”s. Maybe because there is already a Triple A insurance agency and Alcoholics Anonymous. If the investment you are buying is in the A range, it is considered to be a “low credit risk” (probably won’t default). There are three tiers. A a a — highest quality with “smallest degree of risk” Aa1, Aa2, Aa3 — high quality with “very low credit risk” A1, A2, A3 — “upper-medium grade” with “low credit risk”. Hmm seems a little sketchy

S&P has a similar rating scale but their top 3 tiers are A A A, AA, & A. They use a + or – to denote a rating that is slightly above or below the main tier such as AA+ or AA-. A bond with a rating in the B range is becoming on the more risky side. Moody’s has a Baa2, Baa3, and Baa3 and S&P has a BBB+, BBB, BBB- that are considered adequate but it wouldn’t take much for those bonds to start going south. Below that and you would be in the High Yield or Junk bond status. Rarely do municipal bonds get in that range. Also they rarely default.

When it comes to municipal bonds there are two basic types a General Obligation (GO) and a Revenue Bond. GO bonds are deemed the safest for the investor as they are tied to tax revenue and the general ability of the entity to raise taxes if necessary to pay the debt back. Of course this may not seem like such a good deal for the citizens if their taxes are raised. Some states have issued laws (such as California) that make it more difficult to raise taxes without public support. Generally, GO bonds from a healthy municipality with good tax revenues and future growth prospects would receive the top rating.

A Revenue bond on the other hand is a bond issued to build a bridge, hospital, stadium, etc. that is paid back with the revenue (fees, taxes, tools) it generates. So its rating is based on the outlook for the project and likely future success. A bridge in Death Valley might not have as good as a prospect over the San Francisco Bay. Usually, the municipality is fairly certain of success and has done their homework. Ratings are typically in the third to second tier. But again, check out the community and see what is going on. Search Engines can be a wonderfully powerful tool in that regard.

As always I hope this has been helpful. Technically, I’m a CD guy, but this seemed like a useful and helpful topic given where yields are currently.

Tanya

Simon Oloughlan asked:




Your credit rating is important to your financial health. Good credit ratings mean that lenders will lend you money for items you wish to purchase. Home loans, car loans and credit cards are issued on the basis of a good credit rating.

When starting out, it is important to be able to get the major purchases in life. You must establish your credit rating before you apply for major loans. The best way to do this is to talk to a bank manager about establishing a credit rating.

Your bank should be able to setup a small loan account at a low interest rate. Most banks will want you to apply for a credit card instead of applying for a loan. Do not do this. The banks earn a percentage of the credit card fees and charges without incurring the risk. This is why they want you to get a credit card.

Establish your small personal loan with them. Let’s say you borrow $500.00 in the form of a personal loan. This will most likely be over a period of one year at a low interest rate. Your repayments will be around $55.00 a month. This is hardly a financial stretch.

Take your $500.00 and invest it at another bank. Get a term investment account that lets you invest the money for a year. Your interest earned will not be as high as the interest charged to you, but it will off-set the cost of your borrowed money.

Pay your loan back to the first bank with money you earn during the year. Make sure you meet the repayments on time, every time. This is your credit rating we are establishing here. It is the ability and readiness to repay, that financial institutions are concerned with. One error at this stage will mean a down grading of your rating.

At the end of the year, you will have met the terms of the loan and established your credit rating. You will also have savings of $500.00 plus interest earned. Different rating agencies will score you using different formulas. Most agencies use formulas calculated on the history of your borrowing and any information gained from data mining. Data mining is a process of research done by companies about your spending habits and store card information.

Lending from major banks carries the most weight in these formulas. If you feel confident in your ability to repay loans, you can repeat the above process for larger amounts. This also increases your credit score.

Guard your credit rating closely. Enter into joint loans with the upmost of care. Many people have had their credit rating destroyed by a partner in a failed marriage, or failed business venture. Always seek legal advice if you are to put forward your credit rating in joint ventures. Sometimes the use of structured entities such as companies or business entities is a better way to obtain finance on a large scale. You should talk to your financial adviser about this.

Starting out to obtain a credit rating is a very important part of securing your financial future. To create wealth and stay debt free, you will be using the services of lending institutions. These institutions will only lend money based on sound financial lending practises. Make sure you have your budget in place and your credit rating in good order before you apply for a loan. Start small and build your loan amounts. Do not obtain loan money without knowing that you have a built in safeguard for repayment. There are some insurance policies that can cover this aspect for you and we will discuss this in future articles at the Debt Support Center.

Now, go get your credit rating

Dawn

Jack Harmon asked:




Your credit ratings will mean everything in today’s society. It can be something that creditors and banks will base your history and will affect if you might be worthy to obtain approval for that loan that you are applying for.

Having a excellent credit rating score, you may be ready to apply for loans and credit cards quickly. It’s going to mean you could have additional probability in obtaining that loan you need.

It will also mean that you may have much more possibility in acquiring that selected job you could have been applying for and it will eventually also mean which you can pay your bills promptly with the landlords when you’re applying for an apartment.

Getting a fast credit repair can increase your opportunities of improving your score. You may perhaps get authorized for a bank card or a loan, but it will typically have greater interest rates without credit repair. This is simply because creditors aren’t certain that you can pay your costs on time.

It can be riskier for creditors to approve you for that loan when you have a terrible credit score. When it comes to applying for an apartment complex, landlords consider your credit ratings score to establish if you’ll be able to pay your rent bills and utility charges.

These are some of the causes why having a fine credit history rating is quite significant in today’s society. Even so, in the event you possess a undesirable credit score report? When you use a terrible credit rating score, it truly is really crucial to get fast credit repair as soon as possible. You will find a number of techniques that you can restore your credit history credit score.

The first phase in repairing your credit ratings score is by your habits preventing it from getting worse. To accomplish this, you ought to pay your previous overdue debts perfect away so that you can cut off negative credit rating reports from creditors. Despite the fact that this will not increase your credit rating credit score, it truly is the very first stage you must consider whenever you wish to fix your credit ratings rating.

So, this will consider you to the next stage. The following step is by raising your credit score by opening a new savings or checking account. You need to also apply for a secured bank card. A secured credit card will have a greater interest rate, however it can also be a good strategy to control your bank card spending and also a excellent approach to raise or restore your credit ratings. By paying your monthly credit charges on time, you are going to be capable to increase your credit score significantly.

When you continue to try and do these things, you’ll at some point get a good credit ranking. Nevertheless, if your past credit rating contains a bankruptcy your history won’t expire until it reaches 5 to 7 years unless you get professional help. You need to recall that it’ll acquire some time and patience to be able to increase your credit score under this condition.

This is why it is really essential to generate positive reports for your creditors on your credit report. So, bear in mind to pay your loans and charge card bills promptly in order to obtain a very good credit ranking. By doing this, you may eventually end up with a very good credit ratings credit score and historical past. This will also ensure you never miss out on future financial opportunities that may possibly cross your path.

Bertha

Sarah B asked:


Do banks look at the lowest score or do they get an average of all 3 scores.

Jon

Joseph Kenny asked:




Not many people spend too much time thinking about it, but every one of us, has a computer file somewhere that contains all the information that makes up our credit history. This information will include our current and previous addresses, our income level, our outstanding debt and how much extra credit we currently have available to us. It will also show things like our repayment habits, whether or not we pay bills on time and if we have had any county court judgments made against us for payment.

Checks

It will be made available to companies who wish to see it for a fee and it is surprising how many different types of companies now routinely make use of such reports. There was a time when only banks and other lenders used credit reports when deciding whether or not to give you a loan. However, these days, if you are for example thinking of renting a property, it is likely that the property agency will require a credit check in order to satisfy itself that you will pay your rent on time. Insurance companies also make heavy use of credit reports when assessing insurance premiums. Even large employers are now using credit reports to screen job applicants when they assess candidates.

Therefore, it can be seen that your credit rating can have a huge influence over you and your life. It can effect many important decisions that you might never have thought would be relevant to your credit history. For instance, you may not have been too worried about leaving an old phone bill unpaid after moving house, but the consequences can be quite serious.

Tips for Keeping a Healthy Credit Rating

There are some steps you can take to make sure your credit rating stays as healthy as possible. You can for instance pay your bills on time and reduce the amount of outstanding debt you have. You should also know that time is on your side because most negative elements on the report will not last forever.

You have a right to view your credit report and this is generally a good idea as it allows you to make sure it is accurate. If there is any negative information on the report that is in error you can have it amended or corrected. The credit reporting company has a duty to keep all information accurate and up to date. It can make a big difference so you should always inform the reporting company of errors promptly and give them the correct information.

Kurt

Andrew Curry asked:




“Where can I get my free credit rating?”

It’s such a buzz lately that every credit consumer is recommended to get a credit report. So what really is credit report? This is a type of documentation where all the accumulated transactions that ever happened between you and other agencies and merchants using the credit line. The importance of this document is its transparency and detailed inquiry. It reflects each and every authenticated transaction using your name and number.

The next big issue in the credit world is the credit rating. What credit rating is all about is linked with the report mentioned above. It is basically a grade which is given to a consumer based on the paying behaviour he or she does. The credit score or rating has been around for many years now and has evolved into many calculation systems that different agencies adopted. But no matter how the score is being calculated, the fact still remains that the score will see you through (literally).

Credit scoring is not free per say. Not even the three biggest bureaus give this service. What is free is the personal publication of your credit report (done annually as mandated by the federal law).

“How is this important in my life?”

The rating will prove your good behaviour in paying as well as the amount of balance you owe to the banks, creditors and lenders. This rating is usually a three digit number ranging from 350 – 850 and some 300 – 800. The higher the score, the better. Financial agencies will look at the credit score that you have and will try to judge you based on it. If they think that your score is really low, they’ll think you are

Ramon

Mike Clover asked:




Years ago, you could not even get access to your Credit Report. Finding out what was being reported about you was a BIG secret. As a matter of Fact, banks did not want you to know. The reason they did not want anyone to know, is because they cannot make money on an educated consumer. Now under the 2003 Fair and Accurate Credit Transactions Act, you are entitled to one Free Credit Report per year. But the big question is do I need a copy of my report? In this article I will discuss why you do, and what is going on in our market place that could affect you. Especially if you are not up to date in regards to what is being reported about you with all three bureaus.

Companies that pull your credit:

1. 35% of employers now look at your credit before hiring you.

2. Utility companies and they are actually thinking about basing your rates on your credit score.

3. Banks for the following:

a. checking accounts

b. Credit Cards; credit card companies also do periodic credit checks once you are a credit card holder..

c. Installment Loans

d. Mortgage Loans

e. Lines of credit

4. Insurance Companies, they pull credit and base you’re Premium on your credit score.

5. Car Lots

All of these companies are involved in everyone’s life in some form or fashion. In order to survive these days, most of us have just about everything previously mentioned. Your Credit Report is so important to have, I recommend getting a copy of your report every 60 to 90 days. The Reason for this is your creditor’s re- reports with all 3 bureaus every 30 days. Anything can happen on your report that may or may not be accurate. Remember they really don’t want you to know your credit. So, I recommend to everyone, keep yourself informed about what is on yours. You also need your credit scores, the once a year free credit report does not come with credit scores.

Remember “Your Credit is your Life.”

Virginia

Ann Born asked:




Not too long ago, we had to guess at how stable our credit score and rating was. Not any longer. Now we can get a free instant credit report without a credit card. The problem is where to get it? You want to see your credit report and rating in order to understand whether it’s heading down the right road or down the tubes. But you have no idea how to go about it. For years the only people that had access to your credit report were the banks and creditors. Not anymore. You have access to your own information.

If you are looking to obtain a free credit report without a credit card, you will need to understand that it is likely to be very different from the yearly report you may already receive. The yearly report only shows your credit report status on a monthly basis with accounts that have recently been opened or closed, just the rating. Obtaining a free credit report status is a great idea for those that are already aware of their rating but would like to understand their credit score. The score is based on your entire credit history not just the month.

Obtaining a free credit report without a credit card will allow you to understanding your credit rating and credit score. You will be able to determine where you stand on the credit rating scale that the banks use. Your credit report status will help you determine your standings based on a bar of two different colors. The green section of this bar indicates a high or positive credit rating, the red side of this bar indicates poor credit rating that needs improvement. Assess your credit rating with a free instant credit report without a credit card.

Lester

Beth Pardue asked:




There are three main credit bureaus in the United States; Equifax, Experian and Trans Union. Each bureau collects your personal and financial information which is then sold to lenders such as banks, credit unions, credit card companies, mortgage and auto loan lenders. Your credit report is the product of this collected information. Lending and credit companies use your credit information to determine if they will approve you or not and at what interest rate you will pay.

Many people are recognizing the importance of checking their own credit report to verify its accuracy and to make sure that they know where they stand in the credit world. Until they begin the process to obtain a copy of their credit report, some people do not realize that they actually have three credit reports instead of just one. The three main credit bureaus keep separate credit records from one another and produce their own credit reports. Instead of the credit bureaus working together and sharing information among themselves like some people may think, they are actually competitors. That is why the information provided on one credit report will more than likely be different from the information provided on the credit report from another credit bureau. Therefore, it is recommended to check your credit report from all three credit bureaus in order to see the complete picture.

There are a couple of options to checking all three of your credit reports. You can contact each of the credit bureaus individually to request a copy. Or you can go through one of the many companies that provide a 3-in-1 credit report like [http://www.credit-report-credit-score.com]. Obtaining a 3-in-1 credit report is usually more convenient and user friendly to the consumer compared to requesting individual copies.

Verifying the data on all three of your credit reports is the only way to know that the information that potential lenders and creditors are evaluating you on is correct. When considering you for a loan, some lenders will pull your credit report from only one or two of the credit bureaus while other lenders will pull your credit report from all three. It is always a good idea to check your credit reports BEFORE applying for your next big purchase. Covering your bases beforehand can often times save you a lot of time and hassle during the application process.

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Colleen