Credit Score

Powerful Tips about Your Credit Score

A credit score is a number between 350 and 850.  Any person who has bought a car, paid utilities companies or a cable company, or held a credit card has a credit score. Your credit reports must contain at least one account which has been open for at least six months and updated in the past six months to ensure that there is enough recent information to calculate a credit score.  The credit score is necessary to obtain a loan because it helps lenders determine how much risk you may present as a borrower. The higher credit score represents a lower risk to the lender.  The higher your credit score is, the more likely you are to get a loan or other credit with a better interest rate and better terms. A better interest rate obviously can save you thousands of dollars over the course of a loan or other credit obligation. Your credit score is checked every time you request credit, such as when you sign up for a cell phone plan, rent an apartment, apply for a credit card or apply for a loan like a mortgage

Your credit score is calculated based upon your credit history, your payment history (payments more than 30 days late can damage your report slightly), your available credit, your debt level, and any charge-offs or bankruptcies you may have had in the last seven to ten years. Small things also temporarily lower your credit score, such as a lot of companies looking at your credit score. You can get a copy of your credit report free from each of the credit bureaus each year.  The three major credit reporting agencies include Experian, Equifax and TransUnion.

The national distribution of credit scores shows about fifty-eight percent of the population with credit scores has a score above 700.  Approximately 70 percent of the scores exceed 600. And nearly thirteen percent of credit scores are more than 800.

To improve your credit score, or keep a good credit score, you should pay all your bills on time and make at least the minimum payment each time. Your credit score will improve the longer you pay your bills on time.  Avoid closing unused credit cards, pay off as much debt as possible, and avoid opening new credit accounts you don't need.  The most effective way to build a strong credit score is to keep balances low and to strive toward eliminating your credit balances.