Awareness What Influences Your Credit Score
December 14, 2009 by Lynn Daniels
Filed under Credit Articles
It is important that you understand what comprises your credit score and how different things can change your score. You are entitled to get your credit score, for free, each year and it is good to constantly keep track of your score and your credit report. The most basic explanation of your score is that it is a reflection of you previous loan or credit payments which in turn classifies you as reliable or a risk when applying for further credit.
If you have a good score or one that is high then this equates into being very likely that you will meet all of your payments on time and not have problems paying off your loan.
A low credit score means you may have issues paying and there is a chance the lender could lose their money. Many things like department store credit cards and other forms of instant credit are based strictly on your three digit score.
The FICO score is a popular score method developed by the Fair Isaac Corporation. The largest of the credit bureaus use this method and include Experian, Equifax and TransUnion. Your score can be anywhere in the range between 300 to 850 with a higher score being better than a lower score. There are many different sections to your credit report and these all factor in to your score.
Any of these factors can cause your score to change and you want to try to keep your score as high as possible. Your score will be very important when taking out a loan and a low score may make it difficult to get that low. You may still qualify for a loan but it will come with a large initial deposit and very high interest rates. Getting a loan with a high score is much easier and the interest rates will be excellent.
If you have a low score then it is possible to improve your score. Every time your credit report is calculated your score can change. The first thing you need to do is make sure your report doesn’t have any errors.
It also is important that you show you have a long history of credit so keep that first credit card even if you no longer use it.
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