If you applied for a loan recently and got refused by your creditor, go back and check your credit score. It might have dipped further since the last time you checked. Credit bureaus (Transunion, Equifax and Experian) are generally from where your creditors obtain your credit score. And each credit bureau calculates scores based on their own scoring models. Like Transunion uses VantageScoring model, Equifax uses Equifax Credit Scoring model and Experian uses PLUS scoring model. Based on these credit scores obtained, creditors determine if you are qualifying the minimum score criteria for the loan, calculate you interest rate and set your credit limit.

To know how to raise your credit score, you need to first understand how your score is calculated. Apart from the credit scoring models used by these credit bureaus, FICO score is widely used by many lenders. It is used to calculate your general credit risk. You can call up any of the three bureaus and get your FICO along with the individual scores provided by credit bureaus.  But the scoring range in all these scores can vary a lot. For example : As per Vantage scoring model, your average score if you have an auto loan and lease would be around 761 as against 689 according to FICO score. Apart from Transunion, which has a scoring range of 550-991, the average scoring range is 280-990. Therefore, your scores can vary a lot with each scoring model with same credit history. Apart from the three major credit bureaus agencies, you also have regional credit bureaus as well. These usually are credited if your creditor is local, but if you are applying loan from a nationalized bank they might not consider their credit score.

If you haven’t maintained a good credit record, start by clearing your debts and maintaining a good credit history. To improve your credit history, you can keep your credit balances under 30% for good scores and 10% for the best possible score. In addition, call up each of the bureaus and check for credit limits reported on your accounts, lower credit limit means lower credit score.

So, next time you apply for a loan make sure you are maintaining a healthy credit score to get better deal for yourself.

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