Getting back to the A,B,C’s of your credit life means that you have to understand your credit score. Your credit score determines so much of your lifestyle; both personally and professionally for yourself and family. But what is it? How does your credit score work? How can you make your score more in keeping with the life you want?
What Scores Are: Put rather simply, your credit score is a three digit number. Your credit score tells lenders everything they want to know about your credit worthiness. There are five primary details which are taken into account when determining your credit scores: payment history, what you owe right now, how long you’ve had credit, your last application for credit, and what type of credit you are using. The last three are far less important than the first two.
How Score’s Reached: Your credit score is a three digit number. It does not start at 001 or 100; it starts at 300, which is a really bad score, and goes up to 850 which is basically the best score you can get. Your score is important because it not only tells potential lenders what kind of a credit risk you are but it also tells them how much credit they should give you and at what interest rate. Credit rankings are also used when interested parties are hoping to take out a mortgage. Potential employers can even use your scores to determine if they should hire you or not.
How to Improve Scores: Now that you know how it’s determined you can greatly improve your credit score just by being aware of it. You now know that you need to pay your bills on time and you need to lower the amount of outstanding debt that you have. If you are trying to get some massive amount of credit granted to you; say for a mortgage, new car, or something along those lines; then you need to make sure your credit score is as favorable as possible.
Check Your Score: Being aware of your score once just isn’t enough. You need to know what your score is and you need to view your credit reports at least once each year. If there is any specious activity going on then you need to report it and have it taken off.
Your credit score means so much; it should remain on your mind!