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| The Basics on Credit Scores |
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| Written by William Blake |
| Thursday, 14 August 2008 01:02 |
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If you have ever tried to borrow money, get a credit card, or buy something on credit, then someone has probably pulled your credit score. Your credit score (at its most basic) is the odds which lending America puts on your ability to pay back money they lend to you. The higher the score, the more likely you are to pay. These numbers come from information found in your credit report. All the financial activity you have engaged in over the past seven years is recorded in your credit report. If you have filed for Chapter 7 bankruptcy or closed an account that had been in good standing, this will continue to appear in your credit report for ten years. Your three digit credit score is calculated based on a formula developed by credit report companies. They go over information connected to your credit history to determine your score. California established a law in 2000 that allows anyone applying for credit to have access to their credit score. Now federal law permits you access to information that the credit card companies used to keep secret, like how your credit score is determined. Credit scores are not difficult to calculate or understand. The actual score is made up of a number of variables and falls somewhere between 300 and 900. The score is based 35% off of your history of payments, 30% on current debt, 15% on how long you have had credit, 10% on what kinds of credit you have access to now, and 10% on how many times your report has been asked for. After comparing those pieces of information with other similar consumers, your credit score is calculated. Suggestions for improving your credit score: - Maintain your credit rotating at about 25% of your total credit limit. - Don't be late paying. Making payments earlier than necessary does not incur any penalty. - Shop for loans (mortgages, car loans, and other loans of that nature) during a specific period of time - like a 30 day period. These will show up as one inquiry if done in this way. - Know your credit score. Each year, you can check your credit score for free by visiting annualcreditreport.com. Doing so will help you prevent problems from escalating until they create large problems. About the Author: Does the credit card company you deal with use two cycle billing? If you aren't sure, you could be paying even more interest than you think if you don't pay off your credit card every month. Learn what two cycle billing is and why it's so bad on the Debt Smackdown website. Kindly provided by LJ-Marketing.dk You are welcome to use this article on your own website, if you include the link just before this text. |
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