Credit Score Basics
Your credit score has a big impact on your life. You have probably learned this the hard way if you went to go apply for a loan and you were rejected because of your credit score. Your score can keep you from not only getting a loan, but an apartment, a mobile phone contract, and sometimes even a job. Unfortunately, many of us do not know what our credit score is, let alone how to change it. In an effort to fix that, we have compiled all of the basic information you need to know about credit scores so that you can do a better job managing your own.
what is a credit score? Your credit score is essential a numerical representation of how responsible and trustworthy you are when it comes to handling money. The higher your score is, the more responsible you are seen. Lenders use this number to judge whether or not they should lend to you, rather than going through all of your financial history themselves.
There are several factors that go in to determining a credit score. First, credit reporting agencies will look at your current debt situation. This could be other loans that you have out, or any money you owe on your credit cards. Your credit cards are a large factor when it comes to your credit rating, so you want to manage them as best as you can. One thing that credit reporting agencies look at is your credit utilization level. This is the percentage of all your current credit card debt compared against the sum of all your credit limits. If you have a high credit utilization, your score will suffer as a consequence. Another factor that you need to watch our for is how quickly you pay your bills. If you have any missed payments, or are simply late, this will drop your score down. There are many factors that can come into play with your credit score, but these are some of the biggest.
Now that you know what your credit score is, you need to know how to check it. There are many sites online, such as Experian or Equifax, that will check your credit score for you. Most of these sites will give you the first report for free, and after that they will charge you a small fee. If you want a full breakdown of what is determining your credit score, you can request a full copy of your credit file. We recommend checking your credit score every few months, and getting a full copy of your credit file at least twice a year. This will help you to make sure that your credit score remains healthy.
If you find that your credit score is low, you are going to want to start working to improve it. As we mentioned above, there are a few factors that will determine your credit score. You need to look at your individual file and see what could be bringing your score down. Some things that are commonly found in credit scores are too much debt, missed payments, high credit utilization, or a short credit history. Once you know what is causing your problem, you can begin taking steps to improve it. Keep in mind that your credit score will not change over night, and that you will need to keep up good habits for a while in order to start seeing progress in your score.
Hopefully this article was able to shed some light on what your credit score is and how you can improve it. Your credit score should not go ignored, and when you see that it is low, you should start taking steps to improve it as soon as you can. You don't want to find out your score is low when you go to use it, so take care of it now and remove that worry from your life.