|
What Is It And Why Does It Matter?
A credit score is a rating used by lenders to help determine whether you qualify for a particular credit card, loan,
or service. Because it's one of the most influential factors in deciding whether to grant you credit, knowing your score can be indispensable when you apply
for a loan. Based on information in your credit file, the credit reporting company analyzes your information using a complex mathematical model to yield your
credit score. Most credit scores estimate the risk a company incurs by lending you money or providing you with a service -- specifically, the likelihood that
you'll fail to make payments in the next two to three years. Your credit score ranges from 300-850, the higher the score, the less risk you represent.
Looking for a higher credit score?
There's good reason to do so -- a higher score can give you a greater array of financial options and more favorable
credit offers. Even if you already have a good score, there's always room for improvement through good credit management practices. Keep in mind, however,
that your credit score is based on your history of borrowing and repaying money, so there's no way to instantly change it.
In the end, the lender still has the final say about whether or not to give you credit and how much they will charge for it. The lender may take into
consideration any special reasons for your past credit problems. In addition, the lender will look at more than just your credit score -- your equity
investment in a home, job history, income, savings, and the type of mortgage loan you want -- before making a final decision.
- Learn what your current Credit Score is and what appears
on your credit report.
- Try to keep your total account balances as low as possible.
High outstanding debt may negatively affect your score, as you have a greater chance of missing payments.
- Correct any incorrect information that might appear on your
credit report.
- Make all of your payments on time. If forced to miss a payment,
be sure to pay the following month. Past due accounts will be indicated on your credit report.
- The most important tip is to continue to check your credit
report regularly and take steps to correct errors and inaccuracies that can damage your credit score.
|