Credit scores are a mystery to many people. A large amount of us really have no idea of just what is measured and what goes into a credit score. While it is easy to figure out that in order to have a high score it is vital to pay your bills on time there are also other factors that are very essential.
A credit score is just a numerical measurement of certain statistics. It is intended to advise the lenders about the risk factors of the borrowers. Upper scores are considered a lesser risk while lesser 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.
Credit scores are based upon a array of factors and these factors can change regularly. You may have a low credit score yet have never been late on a payment. Other factors can affect your score and bring it down. Different types of credit are looked upon more positively than others and if you have too many credit inquiries on your account that will also affect you negatively.
Here are the factors that will shape your credit score. 35% is based upon your punctual payment history. Only payments beyond 30 days late are counted as damaging. 30% is your debt to credit ratio or the total of liability you have accrued compared to the amount of credit you have on hand. 15% is the length of your credit history. Of course, the longer your record the more advantageous it is. 10% is the type of credit used. Consumer finance debt is considered to be negative while credit card debt, car loans, and mortgages are more of a positive. 10% is how many current inquiries are on your report. Having too many inquiries is considered negative.
Being alert of these factors is the initial step in improving your credit score. Use this data to your benefit. Make your payments on time and never charge more than 35% of your accessible credit. Make sure you continuously keep at least 65% of your available credit on hand. Stay away from department store credit and consumer finance credit and make sure that you are leery about letting anyone check your credit. Never get your credit checked unless you must.
You can augment your credit scores and repair your credit. There are professionals that focus in credit repair or you can do it yourself but be aware that you have the right to challenge negative credit and negative credit scores.
You do not have to struggle with low credit scores. Be informed and take action to repair your credit and upgrade your scores.
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