First Of All, You Need To Understand How Your Credit Score Actually Impacts Your Credit Rating

Category: Finance.

More than likely you have heard of a credit score rating, but you may not have every paid much attention to yours. It is imperative that you learn more about your credit score, and what you, what it is can do to improve it.

Believe it or not, what you don t know about your credit score can be negatively impacting your life without you even knowing it. Your credit score rating, also sometimes known as a FICO rating or FICO score, is where they come up with a score that is a three digit number that represents your credit information. First of all, you need to understand how your credit score actually impacts your credit rating. This score is extremely important, so let s take a closer look at how it can affect your life. You see, when you have a high credit score, your credit rating is much higher as well. The three digit number that is used to show your credit score rating is calculated using a special formula.

High scores are considered excellent, while lower credit scores can give you a credit rating that is poor. The scores that you can get are between 300 and 850 when you are dealing with a FICO score. First of all, 35% of the score depends on your payment history and 30% depends on the amount of money that you currently owe. You will find that there are several different factors that the score is based on. Another 15% is dependent upon the length of your credit history, 10% on the new accounts you have applied for or opened recently, and 10% is based on the different accounts that you have. The range between 660 to about 710 would be considered average or acceptable, and scores under 600 are considered to be poor credit risks. If the calculated credit score for you is over 750, almost all companies would consider this to be an excellent score and a good credit risk.

If you are anywhere below 700, there are almost certainly things you should be doing to raise your credit score rating. It affects the amount of interest you will be charged, the maximum term that the lender will offer, and even whether or not your application will be approved. Your credit score determines your credit worthiness in the eyes of the potential lender. It can also determine whether or not you need to leave a deposit, even for something like renting a home. First of all, paying your bills on time is extremely important. If you do have a credit score that is poor and you want to improve it, there are several different things that you can do.

Also, managing your credit wisely can help as well. Avoid applying for several credit accounts at once as well, since this can lower your score too. You should also be sure to borrow well below the amount of your credit limit, since this can improve your credit rating. The effort you put forth to improve your credit score rating will not go unrewarded since you will find many more doors opened for you when you have good credit. Understand what your credit score is and take the steps to improve it today.

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