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What's My
Score?
How often do any
of us ever check our credit score? Probably not often enough, we
all wait until we go to apply for a loan, then we check, only to
realize that there are few problems. By the time we realize there
is a problem, it is too late to get the loan we want. To avoid
this from happening you need to stay current on our score; this
takes very little time, but will definitely pay off.
There are only
three credit agencies you need to worry about and they are
Equifax, TransUnion, and Experian. These are the agencies that
all creditors and lenders use, however not all lenders and
creditors report to all three of them. That is why checking all
three agencies is so important. They collect all of your credit
history and a score is assigned to give future lenders an idea
what type of borrower you are. Five factors that make up your
score are length of credit, types of credit, amounts owed, payment
history, and any new credit. Each one creates your total credit
score and what lenders will be looking for.
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Length of your credit history is
important because it shows how long you have had good credit and
how responsibly you pay your debt back. Cancelling cards you
have had for a long time can actually lower your score.
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The type of credit you have
available at your disposal. Have a wide range of credit history
shows diversity and the ability to pay back all types of loans.
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How much you owe is a delicate
balance. Having available credit is always good, not going over
50% of your limit. However, showing that you use your credit
regularly is important also.
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Paying back your loans and credit
cards in a timely manner is important. Late payments can be
worse than an old bankruptcy.
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Signing up for
new credit often can bring down your score. Every time you
apply, your credit is pulled and there is now a hit on your
credit. Be selective of who you apply with.
One thing you do
not have to worry about is your credit worthiness being based on
race, sex, religion, national origin, or marital status. It is
against US law to deny credit on these personal characteristics.
Your age and salary may still be considered.
The higher your
credit score the better. Scores that are in the 760-850 range
typically will receive the lower interest rates because they are
in a lower risk group. The lowest score you could have and still
possibly be considered for loans or any other credit is in the
500-520 range. The interest rate will definitely be higher and
you will not have as many options available to you. Anything
below a 500 score will have little chance of approval without
doing a secured loan.
Improving your
credit score will take time, but is definitely worth it. Do
improve the score you will need to check it at least every six
months and stay on top of any activity found within it. However,
having a score that is 760 or higher will get you best rates and
options on loans. Your credit score has become an essential way
to do business. It provides confidence to lenders that you will
repay your debt and in return you receive the better offers and
rates for your hard work.
Article
Source:
http://www.creditwebsite.net |
