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Why Your Credit Score Matters

Inspector, document is my design and artwork. Thanks. Credit scoring expressed by a numerical formula based on an analysis of an individual’s credit files to assess the creditworthiness of that person. A score of 970 suggests that there is only a small degree of risk involved in approving any loan.

Your credit score: 3 simple numbers that largely determine quite a few important financial aspects including what type and how much credit you obtain, what interest you’ll pay and sometimes even if you are eligible for the job you want.

Here are some important things you need to know about your credit score:

  • The large three credit bureaus mainly focus on what you owe and your repayment history
  • The most commonly used credit score (a FICO score) has a range from 300 to 850
  • Standards can change, and for some lenders have increased as to what is seen as a good score
  • Experts have agreed on 720 being a good score and 740 will typically get you the lowest interest rates as well as the best terms

Your FICO score is based on five factors, weighted as follows:

  • Your payment history is 35 percent
  • Amount of debt you owe is 30 percent
  • Length of you credit history, where typically longer is better, is 15 percent
  • Amount of new credit you request is 10 percent. Too many requests, especially in a shorter period of time, is a negative
  • Types of credit you use is 10 percent

Checking your credit:

  • Consumers are entitled to one free credit report every 12 months
  • The three credit bureaus support the website
  • Your credit report will have detailed information: be sure to check for errors and fix them
  • Your actual credit score may cost a nominal fee, such as $10, but its an advisable investment

To improve your credit score over time; pay your bills on time, reduce debt, look out for errors in your credit report and pay off your bad debt and ask for it to be mark as paid on your credit report. Patience is important in improving your credit because it doesn’t happen fast but these steps are known to help your score.