Many consumers have no clue what a credit score is comprised of. What are they measuring and how does this number relate to my creditworthiness? While common sense tells us that paying our bills with time to spare is an essential factor what else is crucial when it comes to credit scores?
A credit score is just a numerical measurement of certain statistics. It is supposed to advise the lenders about the risk factors of the borrowers. Upper scores are considered a lower risk while inferior scores are considered to be a higher risk. Scores above 700 are considered excellent credit risks and scores below 600 are considered to be bad risks.
Opposite to accepted belief, credit scores can change frequently. There are a array of factors that are involved in the scoring and these factors change regularly. You may have always been prompt with your payments yet other factors can take down your credit score. Different types of credit are scored differently and having too many inquiries on your report can also be unfavorable.
Here is a breakdown percentage of the factors that shape your credit score: 35% is based upon your reliability and payment record. Only payments more than 30 days past due are counted negatively. 30% is attributed to your ratio of debt, meaning your amount of debt compared to the credit you have on hand. 15% is for the length of your credit history. 10% is the types of credit used. For example, installment, revolving, consumer finance. Be informed that consumer finance accounts are considered a negative. And the last 10% is recent searches for credit and/or the amount of credit obtained of late.
Being attentive of these factors is the first step in improving your credit score. Use this data to your advantage. Make your payments on time and never charge more than 35% of your available credit. Make sure you continually keep at least 65% of your accessible credit on hand. Stay away from department store credit and consumer finance credit and make sure that you are guarded about letting anyone verify your credit. Never get your credit checked unless you must.
You can improve your credit scores by taking action on these items. You also have the right to question anything that is listed on your report. There are ways to repair your credit and there are even some professionals that can aid you.
Don't battle with low credit scores any longer. Get knowledgeable and take action to improve your scores and repair your credit.
A credit score is just a numerical measurement of certain statistics. It is supposed to advise the lenders about the risk factors of the borrowers. Upper scores are considered a lower risk while inferior scores are considered to be a higher risk. Scores above 700 are considered excellent credit risks and scores below 600 are considered to be bad risks.
Opposite to accepted belief, credit scores can change frequently. There are a array of factors that are involved in the scoring and these factors change regularly. You may have always been prompt with your payments yet other factors can take down your credit score. Different types of credit are scored differently and having too many inquiries on your report can also be unfavorable.
Here is a breakdown percentage of the factors that shape your credit score: 35% is based upon your reliability and payment record. Only payments more than 30 days past due are counted negatively. 30% is attributed to your ratio of debt, meaning your amount of debt compared to the credit you have on hand. 15% is for the length of your credit history. 10% is the types of credit used. For example, installment, revolving, consumer finance. Be informed that consumer finance accounts are considered a negative. And the last 10% is recent searches for credit and/or the amount of credit obtained of late.
Being attentive of these factors is the first step in improving your credit score. Use this data to your advantage. Make your payments on time and never charge more than 35% of your available credit. Make sure you continually keep at least 65% of your accessible credit on hand. Stay away from department store credit and consumer finance credit and make sure that you are guarded about letting anyone verify your credit. Never get your credit checked unless you must.
You can improve your credit scores by taking action on these items. You also have the right to question anything that is listed on your report. There are ways to repair your credit and there are even some professionals that can aid you.
Don't battle with low credit scores any longer. Get knowledgeable and take action to improve your scores and repair your credit.
About the Author:
See how I brought my credit score up considerably and became an expert in credit repair.
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