Thinking like a creditor and understanding why they think the way they do, can be a real asset when improving one’s financial literacy. And when trying to improve a credit profile its important to know at what creditors are focusing. When creditors receive a credit report for a credit applicant, the first thing checked is the credit score. If the credit score is above the desired mark for the particular credit program then everyone’s happy. Scores above 700 are usually the desired mark for most creditors, however, scores lower than 700 do not cancel Christmas for most consumers and creditors alike. Credit can generally be achieved with scores as low as 580. There may…will be a risk assessment imposed and a higher interest rate factored in for scores lower than 680-700.

Oftentimes, when scores are not in a program’s most desirable ranges, creditors then look to two other areas, payment history and debt carried. Payment history gives the creditor an idea of your habits in regards to paying debts owed; however, total debt is the 2nd area of importance. Few consumers understand or even realize how much debt they actually possess. Creditors want to know the amount of debt to pre-determine stressed household budgets because of overloaded debt. Developing a plan to reduce overall debt will give a big boost to a credit score and reduce total money paid for purchases because of the reduction in interest payments spread over a shorter period of time. So making a creditor’s second look your priority can significantly enhance your credit profile.