Every year, a credit repot comes out with a corresponding score at the bottom. This could be from 350 to 800 and it varies from person to person depending on their consumer behavior. Your credit score is based on different things. This includes your credit history, outstanding debts, credit length,
number of inquiries made and the types of credit that you have.

The one that carries the biggest weight is the credit history since this takes into account what has happened over the past 7 to 10 years. During this time, you may have incurred late payments or filed for bankruptcy. If there are none, then you get a perfect score.

The second biggest chunk comes from any outstanding debts that you may have. This could be a loan that you applied for to pay for a house or a car. If this was paid for already, then that is good. A more recent loan could affect your credit score.

Half the percentage value of the second is the length of your credit. If you have had this for 5 years or more, then you are a better off than someone who is just building it.

The next ten percent comes from the number of times you have made inquiries about applying for a loan. If you have done this regularly, it tells creditors that you were turned down a lot in the past.

Last but not the least is the types of credit you have. If you have large credit, then good for you.

If you were to ask what is considered to be a good credit score that reflects on your report, experts would say that this must be 700 or higher. Those who are able to reach this figure will be able to get a loan and pay this back at a lower interest rate. People who are below this score will have to pay at a higher interest rate.

The good news about a credit report and score is that this changes. If you didn’t score well this year, you have a chance to improve on it next year. But you must first find out what is your credit score and see what brought it down.

If there were unpaid debts, these should be settled. Should there be any mistakes, do not just accept it but report it so this can be investigated and corrected. Being able to control your spending is the only way any one can have and maintain a good credit score.

For those who are having a hard time, there are people who can help. So don’t be afraid to get the assistance of financial advisers.  

The credit score is your final grade in a report. Although there is no passing or failing mark, there is a standard that creditors use to determine if your loan should be approved or not and at what interest rate will be followed.

The credit report offered by crediting agencies use varies. You will notice when you get a copy from the three namely Expedia, Equifax and Transunion but they all say the same thing and that is whether or not you are in good standing. You can get all these at the same time or after every few months. The best part is that you can get a copy for free.

Credit Score Chart

A credit score chart is what creditors look at to see if you are in good standing or not. This helps them decide whether or not to lend you money that you need to buy a car, a house or pay for tuition.

Because it does not take into account gender, race, religion, martial status or national origin, it is fair. What they use as basis is your behavior over the past few years. They will look into your credit history to see if you have any debts or outstanding loans, lines of credit and how long have you been given credit.

There is a certain percentage on each of them so if you don’t do well in one, there is a chance that you could improve on this in the others.

The one that is used by credit agencies is the FICO score and this information is available to you and to the lender.

The credit score chart is from 300 to 850. Majority of Americans score above 700, which is good and makes it easy for them to get credit and even waive a deposit. A small number don’t do well and they have to work hard to improve it.

Keep in mind that the credit score chart is just numbers. They don’t tell you how to improve your score or maintain it. So, to help you along the way, here are a few things you can do.

First, pay your bills on time. This comes monthly and you are given time to pay for them so make sure to deposit the amount before the due date to avoid paying penalties.

Second, decrease your debt. Surely, apart from your monthly credit card bills and utilities, you have may a few loans. Since you applied for these, it is only right that you live up to your end of the bargain by paying these at the agreed upon date.

Third, if you think having multiple lines of credit is good, think again. Studies have shown that this backfires on the person since they are more at risk of non payment which in the end has a negative effect on your credit score. So, if you don’t need it, don’t even bother and if you do have, get rid of them.

Fourth, review your credit report. If you have paid your bills and loans on time but your score is not that high, check for errors. Most of the time, you may find one or two things there that are not true. If this is the case, call the crediting agency and send them the supporting documents to prove your case.

The standard protocol here is for the crediting agency to conduct an investigation. If your creditor cannot dispute what you have claimed, then they have to change and a revised copy of the credit report will be sent to you for free.

If you want to get a credit score report for free, look at the different agencies that provide this service and compare them. Some will give you a copy for free while others will ask you to pay a certain amount monthly.

You can also find a credit score chart by going online since this is posted which saves you the trouble of looking at different sites.
Credit Score Explanation

Numbers have different meanings. In school, you are given an “A” if you excel in a particular subject. In the real world, a 600 or 700 could have an effect on your ability to get a loan. This is called your credit score and to give you an idea, here is an explanation.

The credit score is an indicator that tells lenders if you will be able to pay the amount that will be loaned to you. The scale goes from 340 to 750 and the higher it is, the less risk the lending institution is taking because they know you will be able to pay for it with interest.

If your score is below 700, you can still apply for loan but expect to pay at a higher interest rate as this is the only way that the lending institution can be sure you will be able to pay them back.

Your credit score is calculated based on several factors. Thirty-five percent of the total score is based on your credit history. You could get a perfect score here or have a few deductions if ever you have had any late payments or bankruptcies. The more recent it is, the greater the deduction.

Thirty percent is based on outstanding debt. This may come from car or home loans, credit cards bills and utilities. If you use your credit, make sure you only use 25% of the limit or less so it does not have effect on your credit score.

Fifteen percent of the credit score comes from the length of time that you have had credit. The longer you have it, the better because this will give creditors an idea of your consumer behavior.

Ten percent of the score is from the number of inquiries you have made in the past. The trick here is not to have many inquiries. Those who do inquire frequently give creditors the impressions that you are piling up your debt.

The last ten percent is based on the types of credit you currently have. This includes the number of loans and credits that are available to you. This weighs heavily when you are just establishing your credit history.

There is no actual passing or failing mark when it comes to your credit report. However, creditors have designated 700 to be the ideal credit score you should get. Sixty percent of Americans are able to achieve this so it shouldn’t be that hard for other people.

But if you are one of those that are not able to reach it, you can still improve on your score. If you have outstanding debt, pay for it. If these are credit cards, make sure that this is paid on time.

If you are having a hard time, try to negotiate with the lender so an arrangement can be made and this doesn’t have to appear anymore on your record.

Now that the credit score has been explained, you will now be able to interpret what those three digit numbers mean when you get a copy of your credit report. Aside from looking at the total score, review each item carefully so that if there are any errors, this can be reported and corrected.

The credit score also changes annually so don’t forget to get one a new one the following year.
Credit Score Ratings

When you apply for a job, the employer will do a background check before hiring you. Banks and other lending institutions do something similar to make sure you can pay for the loan by looking at your credit score ratings.

The credit score rating is used not only in United States but other countries as well. How they call it and the figures they use may be different but it is designed to do the same thing.

How this is computed depends on different factors such as the amount of your outstanding loans, the length of your credit history, the types of credit you have used and any new credit.

Each of these factors has a certain percentage so your credit score rating could be from 350 to 750.

People who have a good credit score rating will be able to apply for a loan at a low interest rate. Those who are in the red will have to pay at a higher interest rate or have to face the fact that their request has been disapproved.

You can get a copy of your credit score rating by asking for a copy from an accredited agency. These are namely Expedia, Equifax or Transunion. If you browse through their website, you can already see it after you fill up the fields on the screen.

But what if I have a poor credit score rating? The good news is that you can change this but you will have to cut down on your expenses so the money saved can be used to pay off your debt.

Sacrifice on your part may mean only going shopping to buy the essentials such as food, clothes and gas.

You will have to forget about buying any luxury items or going to the spa for a while since these are just unnecessary expenses.

If you have more than 2 credit cards, pay them off and then cancel them. A good idea will also be to go around with only one card in your wallet and the other at home that will only be used for emergencies.

People who are in deep financial debt will probably have to sell some valuables to prevent the debt from getting bigger due to interest.

If all else fails, you should get the help of a financial advisor to come up with a plan.

There are also a few companies out there that can help improve your credit score rating to what is known as debt relief or consolidation. This looks good in the short term but it does not make things any better.

When the debts have been paid, this is the only time that you can breathe easy. You can give your credit score rating a boost by applying for a new credit card by getting one offered by supermarkets and groceries since they offer low interest rates to card holders.

By paying debts on time, you will be able to see a significant improvement in the credit score rating this year compared to the year before which just goes to show that with a little sacrifice and work, this problem can be overcome.

As for those with good credit score ratings, keep up the good work because paying for what you purchase and borrow will allow you to do this again in the future without any problems.