The word of credit score usually refers to your FICO score. FICO score is a number based on a formula that developed by the Fair Isaac Corporation. This corporation will look at a summary of all your credit accounts and payment history. The FICO scores range from 300 to 850. The corporation calculated the score for each of the three big credit reporting agencies. They are Equifax, TransUnion, and Experian. If you have the higher score, it means you can borrow more money and the less you will pay for the loan.
The meaning of the credit score is: 35% is determined by your payment history which means do you regularly pay your bills or fines on time to any creditor? Your unpaid library fines, parking tickets, and medical bills will appear here. The next is 30% is based on the amounts you owe. If you max out your credit card, your score many suffer. 15% is your credit history length. It means how long you have had each account and how long it is been. The older and fewer the accounts will get the better assume. 10% we based on how many accounts you have recently opened. It is compared to your total account number. You can get the financial trouble if your score can drop if it looks as if you are seeking for several new sources of credit. Remember that every inquiry you trigger when you apply your credit card will affect your score.
The 10% as the final one is determined by the types of credit used. You can manage a large loan if you can pay a fixed amount each month. To get the best rates on a loan, you should have the score for more than 700. Therefore, you can achieve it if you pay all of your bills on time. You also need to keep a low balance on your credit card and it is best to pay off your balance entirely each month. If you need a copy of your credit report, you can get it from the three major credit agencies once a year. If you want to see your actual score, you have to pay. Be aware that the score you order may be one developed by the agencies.
It is not a scare thing if you notice these things about the credit report. You should know that there is no single number which means different lenders produce different scores. You also have to know that different scales get the different scores. If you see that FICO scores range from 300 to 850, it will ask you to need about 760 or better for the best mortgage rates. The 720 score is good to get the best deal on an auto loan. Then, about 10% of lenders that used VantageScore, it ranges from 501 to 990 and it has the letter grades from A to F. You can do a credit checkup too which you can monitor your credit by requesting a free report once a year. The free report will not include your credit score because you have to pay for it.
One important thing is to maintain your credit health. You should try to keep your credit utilization ratio low and that is all. Be aware of the debt you have compared with the amount of available credit that you have. You can boost your score by having a variety of loans like a credit card, mortgage, and a car payment. Pay down balances as much as possible and if you are not applying for a credit card, it does not matter what your score is tomorrow! What do you have to scare anymore? Everything is fine today as long as you do the right steps toward it! You just need to show anyone, especially the brokers and lenders that you have the ability to finish your loan and pay the credit on time. Be the good creditor and have the simpler life because whenever you need some money, many places to go to borrow and they will accept your request no matter who you are! It is because of your clear credit report! Good luck!