Financial Blog

We all know that paying back all the loans on time is good for our credit history, and vice versa, when we “forget” to pay a due bill the credit history falls down very fast. But how can a person get know precisely how good (or bad) his credit status is? The status of your credit depends on the amount of credit scores you owe. First, we should learn about the way the credit score is calculated. Let’s look up at Wikipedia:
A credit score is a numerical expression based on a statistical analysis of a person’s credit files, to represent the creditworthiness of that person, which is the perceived likelihood that the person will pay debts in a timely manner. A credit score is primarily based on credit report information, typically sourced from credit bureaus / credit reference agencies.

So isn’t it a good idea to know you credit score before applying for a big credit, getting a new credit card or taking a mortgage. Not all Americans aware of a wonderful possibility to apply for a free annual credit score report. Moreover, it is possible to get your credit score online. Using this information you can undertake some steps to improve your score in order to get a better loan. Check your improved status in several months (remember, only ONE annual report is free), and get the credit you deserve. Usually, the result really costs the money spent on second credit report. You may get a proposal of your credit line extension and lifting of your credit card limit even if you have a poor credit score. Don’t haste to accept these opportunities, learn about the extended credit lines dangers!

Credit scores are used to measure the risk of lending money to particular person. Various factors are taken into account while calculating your score. Personal financial history is very important. Here are the main components that affect your score and their approximate weight:
35% — punctuality of payment in the past (only includes payments later than 30 days past due)
30% — the amount of debt, expressed as the ratio of current revolving debt (credit card balances, etc.) to total available revolving credit (credit limits)
15% — the length of your credit history
10% — types of credit used (installment, revolving, consumer finance)
10% — recent credit applications and the amount of the recent credit obtained.

Use this information wisely, and you will surely save a lot of $$$.

Bookmark to:

Filed under: Loans by admin