Discover How To Better Understand Your Credit Score

July 27, 2011 by  Filed under: Credit 

In this article I’m going to talk about how to better understand your credit rating and how your credit history works. Most people don’t really understand their credit (FICO) history and how it works or affects them qualifying for a loan. After reading this article you will have a much better understanding of how your credit (FICO) score works and what you can do to improve it.

When lenders are considering giving you a loan your credit report and credit history helps them determine if they will give you the loan or not. By looking at your credit score and history the lender can determine if you are a good at risk or not. The information in your credit history is a key element in showing the lender how you manage your finances and how you pay your bills.

If you have a low credit score, you are considered a high risk and you may be forced to pay a higher interest rate. Or you may not even get the loan if your score is really bad.

On the other hand if you have a good credit score you are more likely to get the loan and get favorable interest rates and terms.

For a better understanding of your credit score.

Get a copy of your credit report from one of the top main credit reporting agencies. They are Experian, TransUnion and Equifax. According to the law you are entitled to one free report every 12 months. Unfortunately, the law does not require them to give you your credit score. You may have to pay for this.

After getting your score you will see that it will be in the range between 300 and 850 which is the highest score someone can have. Scores of 760 and higher are considered the best credit risk. Scores that are between 700-760 will normally get you better interest rates on larger loans. Credit scores of 680-700 and higher are usually considered to be good.

The following tips can help you improve your credit score.

Always make your payments on time. Making late payments will have a negative affect on your credit score and your credit history.

It’s okay to have credit cards, just make sure you use them responsibly and pay them on time. Don’t max them out and make only the minimum payments. This is not managing your finances. Opening new credit card accounts, just because the credit card companies are sending your offers, does not help your score, as a matter of fact it can lower your score. Having dozens of cards doesn’t mean you are a good risk.

Keep your balances low on your credit cards and other revolving credit accounts. Having a high outstanding debt ratio can hurt your credit score.

Closing a credit card account out does not mean it is off your report. The history from that account may still be on your report and may be calculated into your score.

Review your credit report and look for any inaccurate information or negative credit. If you find something that should not be on your credit report, contact the credit bureau and have it removed. This can help improve your overall credit score.

By the way, do you want to learn more about how I show my clients to save money on their vehicles?

If so, download my free eBook here: How to Buy Smart so you’ll know if you are paying the right price for your vehicle.

Article Source:
http://EzineArticles.com/?expert=Mike_Reitz

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