Multiple factors affect your credit score, including your ability to repay on time, the number of accounts you hold, the type of credit you have, and your credit utilization. If you are looking to improve your credit score, it’s important to take the following steps.
What is my credit score?
Your credit score is a numeric rating assigned to your credit worthiness by credit ratings agencies. There are multiple ratings agencies in the world, and different scorecards for each of them. Typically, if your credit is being graded on a scale of 300 – 850, a good credit score is 700+. It’s important to stay abreast of changes to your credit score because this affects your ability to apply for jobs (in certain cases), get rentals, mortgages, auto loans and the like. A good credit score indicates that an individual is managing their financial affairs well.
Where can I get information on my credit score?
The US government has mandated that everyone is entitled to a free credit report from TransUnion, Experian, and Equifax. These free credit reports are only available once a year. However, you can certainly pay for your credit report whenever you want it. Many people are unaware that they are entitled to a complimentary credit report every year.
What is it important to check my credit score?
Believe it or not, identity theft is real. Many people fall victim to identity theft and fraud and this can have a devastating effect on your credit score. If con artists steal your ID and open accounts in your name, it will affect your credit score. If you’re planning to purchase a home, a car, or simply applying for credit at a store, it’s important that you understand what your credit score is. Credit reports can negatively affect the outcome of credit applications, and result in adverse action. Fortunately, it’s free to check your credit score every year. Instead of paying for the privilege, exercise your right to gain a free copy of your credit report.
When you’re trying to rebuild your credit or maintain a healthy credit, your credit score is where it all begins. It’s impossible to manage your personal finances without having a good grip on your credit score, and you will be able to access important information about your creditworthiness from these reports. If identity theft is an issue, you will see details of it reflected in your credit report. By identifying names that you are not familiar with, or Social Security numbers that are strange, you will know whether you have been defrauded. Plus, if you notice any anomalies on your credit report you can submit a dispute to the reporting agency and get the problem rectified before it balloons out of control.
Can you apply for a loan with poor credit?
Many folks mistakenly believe that a poor credit score prevents them from applying for a loan. Luckily, this is not the case. Even if you have bad credit, some providers are still willing to provide you with a loan. You will be able to apply for amounts as little as $250 upwards of $5,000 with poor credit. Many of the trusted credit providers realize that people don’t all have excellent credit. The financial system we operate in tracks our creditworthiness. This is a reference to our ability to repay credit. Lenders typically gauge our ability to repay based on our credit score. The FICO score is the industry standard for evaluating credit. On that rating scale, 700+ is regarded as good credit.
Our credit report is made up of a weighted selection of factors. These include the following:
- The Type of Credit That We Are Using – 10% of the total
- The Amount of New Credit We Have Applied for – 10% of the total
- Our Payment History – 35% of the total
- How Much We Are Still Owing – 30% of the total
- How Long We Have Had Credit – 15% of the total.
As you can see, a credit report evaluates our ability to manage our finances on every level. If difficulties have beset you, you’re still entitled to credit, but it’s important to shop around to acquire the best loan for your needs.