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What Is The Meaning Of Your Credit Score?
In the United States, your credit score is everything. It’s something you have to take care of. If you don’t, finding a phone, cable or gas line tied to your home can be difficult to do.
There are certain companies that check your credit score first before hiring you. Even if you qualify for the job, a low credit score can ruin it all.
Your credit score is analyzed by lenders, such as banks and credit card companies. Just imagine if you need to get a loan to start your business, you have a low or bad credit score, you have a small chance of getting that loan approved or you may get it approved but with a high interest rate.
The same thing happens when you apply for a credit card. Credit card companies or banks that issue credit cards will first check your credit score before approving your application. A high credit score means you have a greater chance of getting the best credit card rates with more features and lower interest rates for all your purchases using a particular credit card.
Whether you are applying for a loan, car loan and other types of loans, your credit score will play a very important role in it. That’s why it’s so important to have a high credit score and keep it that way or increase it.
First, you need to understand what a credit score is.
Credit scores will range from 300 to 850. This number will show to calculate the probability that you will pay their debts or not. This means that if you have a high credit score, creditors will be convinced that you are a better credit risk than someone with a low credit score.
In the United States, FICO (or Fair Isaac Corporation) is the most popular credit scoring model in the country. They calculate your credit score using a formula developed by FICO. The system is used primarily by credit and consumer banking businesses across the country.
Credit scores are calculated using the following factors:
*Timely arrival of payments
This will be 35% of the calculation. If you pay your bills on time or before the due date, your credit score will be higher.
* Volume used
This will account for 30% of your credit score. It will contain the ratio between the current liabilities to the total current liabilities. If you use your credit card and if you don’t use the entire credit limit, you will get a higher score.
* Length of credit history
This will be 15% of your credit score calculation.
* Types of credit used
This can affect 10% of your overall credit score.
* Recent credit search or recently received credit amount
This will be 10% of your total credit score calculation.
Surprisingly, not many people know their credit scores and often wonder why they have been denied a loan or credit card application. You can easily get a copy of your credit report by requesting it from the three major credit reporting agencies. The law allows you to order a copy of your free credit score from every consumer reporting company nationwide every 12 months. How to get your credit score?
* On the web
* With a toll-free number
* By post
Complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, PO Box 105281, Atlanta, GA 30348-5281. You can find a copy of the document at: ftc.gov/bcp/conline/edcams/credit.
You can order your free credit score from every consumer reporting company nationwide at once, or one at a time.
They will be able to give you a free calculation of your credit score every year. It’s also a great way to find out if there are any errors on your credit report that could be causing you to have a lower credit score. You can ask for it to be fixed so that you have a higher credit score than before.
Always remember that your credit score is an important part of your life. Keep it high and you’ll get better deals on loans, and credit cards.
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