Many consumers have no hint what a credit score is comprised of. What are they measuring and how does this number correlate to my creditworthiness? While common sense tells us that paying our bills on time is an eminent factor what else is key when it comes to credit scores?
A credit score is a numerical rating that takes into consideration certain statistics and compiles that information into a number that represents a consumer’s creditworthiness. The higher the score the better credit risk the consumer is deemed to be. Scores above 700 are thought to be excellent while scores below 600 are inferior.
Opposite to accepted belief, credit scores can adjust frequently. There are a assortment of factors that are involved in the scoring and these factors change frequently. You may have always been timely 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 negative.
The factors that have an effect on your credit score are as follows. 35% is your payment record. Keep in mind that only payments past 30 days late are considered damaging. 30% is based upon how much you owe compared to how much credit is accessible to you. This is referred to as the debt to credit ratio. 15% is the length of your credit history, the longer the better. 10% is the type of credit you employ. Credit cards, car loans and mortgages are considered positive while consumer finance debt is considered negative. 10% is the current inquiries on your report. Next time you are at the department store and they offer you 20% off for opening a credit line, just say, “No”!
Having some facts about these factors and how they influence your score is a satisfactory first step when it comes to repairing your credit and raising your credit scores. Use the data to your advantage. Keep your debt to credit ratio not more than 35%, make your payments on time every time and stay away from consumer finance credit and department store credit. And do not let anyone check your credit for any cause unless you are definitely getting credit. Do not let anyone check your credit on a whim.
You can raise 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 assist you.
You do not have to struggle with low credit scores. Be knowledgeable and take action to repair your credit and improve your scores.
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