How is Your Credit Score Measured?
Lenders place a great deal of importance on your credit score. Because this number is an aggregate of your past credit accounts, they use it to guess at how responsible you will be with your future credit accounts. While this approach is not flawless, it is almost universally applied.
There are three main credit reporting agencies. They collect all of the details of your credit accounts and compile them for easy reference. The data includes payment history, balances, and number of accounts. Then lenders can access this information as part of their loan adjudication process.
You are entitled to a copy of your credit report once a year at no cost. This is not the same as obtaining your credit score, which the bureaus will charge you for. You can write to the reporting agencies to request your copy.
Your credit score is also known as your FICO score. This is an acronym of the Fair Isaac Corporation. They were among the first to develop the scoring system that used by many lenders to adjudicate risk. The extent to which lenders use this the FICO score will vary, but there is no denying that it is a key factor in the approval process.
As much as the credit bureaus endeavor to maintain impeccably accurate records, occasionally mistakes do happen. For this reason it is very important to check your credit report regularly. If you do discover any errors or omissions they are easier to fix the sooner they are identified.
There is no denying that a high credit score makes it easier to be approved for credit and obtain better interest rates. In this light it is crucial to protect your credit rating. Be certain to make your loan payments on time, because late payments are the fastest way to bring down your score.
After that too much outstanding credit will hurt your score as well. Do not over extend yourself with credit cards and do not bring the ones you do have to their limits. Frequent inquiries to your credit bureau can bring down your credit score so be careful not to unnecessarily apply for new loans or cards. Remember that it is much easier to lower your rating than it is to improve it so make your borrowing decisions wisely.
There are three main credit reporting agencies. They collect all of the details of your credit accounts and compile them for easy reference. The data includes payment history, balances, and number of accounts. Then lenders can access this information as part of their loan adjudication process.
You are entitled to a copy of your credit report once a year at no cost. This is not the same as obtaining your credit score, which the bureaus will charge you for. You can write to the reporting agencies to request your copy.
Your credit score is also known as your FICO score. This is an acronym of the Fair Isaac Corporation. They were among the first to develop the scoring system that used by many lenders to adjudicate risk. The extent to which lenders use this the FICO score will vary, but there is no denying that it is a key factor in the approval process.
As much as the credit bureaus endeavor to maintain impeccably accurate records, occasionally mistakes do happen. For this reason it is very important to check your credit report regularly. If you do discover any errors or omissions they are easier to fix the sooner they are identified.
There is no denying that a high credit score makes it easier to be approved for credit and obtain better interest rates. In this light it is crucial to protect your credit rating. Be certain to make your loan payments on time, because late payments are the fastest way to bring down your score.
After that too much outstanding credit will hurt your score as well. Do not over extend yourself with credit cards and do not bring the ones you do have to their limits. Frequent inquiries to your credit bureau can bring down your credit score so be careful not to unnecessarily apply for new loans or cards. Remember that it is much easier to lower your rating than it is to improve it so make your borrowing decisions wisely.
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For more information on the rating scale credit score and increasing your average FICO score please visit The Credit Camp.
posted by Credit Counseling at
4:51 PM
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