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Understanding credit scores
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[QUOTE="Frenzybliss, post: 300664, member: 94892"] Understanding credit scores Introduction If you've ever gotten a credit card, applied for a loan or had a tax return taken out of your account, chances are you have at one point been asked to provide personal information. Credit scores are the result of this information being analyzed and scored by an outside agency (in most cases, the credit bureaus). Unfortunately, these scores can be difficult to understand and even more difficult to manage. You might think that having higher credit scores means that your finances are in better shape than someone with lower scores but that's not always true! In fact, some experts say there's no correlation between how good your financial situation is right now and how good it will be tomorrow: It all depends on how well you manage your debt today Credit scores are not just for lenders. You may have heard that credit scores are used by lenders, but they're really used by everyone. They're used by employers and landlords, insurance companies and banks. It's not just lenders who care about your credit score it's anyone who wants to make sure you pay them money or rent a home from them. So even if you don't have any debt in your name (and perhaps never will), the fact that someone checked your FICO score could influence how much of an impact your job or apartment search will have on their bottom line. What do credit scores really mean? Credit scores are a method of determining your creditworthiness.They're calculated based on your credit history, and they can help lenders determine whether they'll approve you for loans or other products. Credit reports tell lenders how you manage money over time, including how well you pay bills on time and how much debt you have (if any). A good score will reflect these factors in an accurate way the higher the number, the better! The formula used to calculate these scores is complex but ultimately boils down to two things: the amount of available credit in your report (the total amount lent) and how long ago those accounts were opened or closed (the age). How can I improve my credit score? Paying bills on time is the first step toward improving your credit score. If you don't pay a bill on time, the money will be applied to your next statement and that can negatively affect your FICO score. You should also keep your credit utilization low so that you aren't spending more than 30% of available credit. If you're looking to establish a good credit history, make sure that all of the accounts in question are current and paid off in full each month (or at least 90 days past due). This will help build up positive information about yourself over time and it'll help build up positive information about those accounts as well! Use this guide to understand and better manage your credit score. Know what a credit score is. A credit score is a numerical representation of your credit history, which lenders use to determine whether or not you're likely to repay them on time. You can improve your score by paying bills on time and using only one account at a time. Improve your score by paying off all debts including student loans and mortgage debt in full, even if it means taking out new loans while you're in debt repayment mode (this will help boost your overall FICO score). If possible, try to keep balances low and avoid paying interest! Manage multiple accounts with just one bank account. Lenders look at everything from activity within different banks' systems when deciding how much money they'll lend out; this means that having several accounts might be an advantage for many people who need additional lines of credit but don't want them all under one roof! Conclusion This guide is designed to help you better understand your credit score and how it affects your life. By following our tips, you can learn ways to improve your credit rating and take control of your finances. [/QUOTE]
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