Many people feel you have to be a rocket scientist to understand credit rating scores. They are bewildered by the number system and all the elements that go into defining a score. Many people resent a number determining whether they are credit worthy or not.
Becoming credit literate is the best way to raise your score, taking control of your financial future. Educate yourself on credit repair, ways of increasing your credit score, and finding negative discrepancies in your credit report.
This score is rated based upon how you pay your creditors. All creditors report to the top three credit bureaus: Experian, Equifax, and TransUnion. Late payments, missed payments, tax liens, bankruptcies are all on your credit report and will lower the credit score. Timely payments, positive credit history, reasonable debt, employment all raise the credit score. Not having a credit history actually gives a lower score, even though no debt is owed. It is better to actually be making payment to a creditor than not having any debt at all.
Inquiries made by credit card companies, or any other type of lenders are derogatory to your credit score. Applying for numerous loans or credit cards also effect your credit adversely. Even if you don’t get a credit card, just the application is a negative mark on your score. The balances on all your accounts are another factor. High balances and too many revolving credit accounts decrease your score. Credit scores fluctuate monthly as creditors report their information.
Credit scoring was developed by a California company, Fair, Isaac and Co. (FICO). It is based upon a certain number of points. The points range from 300 – 900. A score higher than 700 is considered credit worthy. A score in this range will give you better rates for mortgages, car loans, student loans, and credit cards. Most people fall into the 600 – 700 point range. This range will allow you to get loans and credit, but at higher interest rates. Anything below 600 is not considered credit worthy. Most people with this score will not qualify for credit.
Improving your score is not impossible. Free credit counseling agencies are available for anyone who needs help repairing credit. They offer tips and strategies for repairing credit, paying off debt, and lowering interest rates. This can give you the knowledge you need to reach financial security.