Determining how much we live our lives is our credit scores. We practically buy everything on credit. Our good credit scores help us receive reasonable interest rates when we are applying for a loan. In fact, everyone looks at our credit scores, from landlords to insurance companies to utilities because they are a reflection of our financial health. If you have a healthy credit score, then this may determine the various agencies that will charge for their services. Today, even employers check personal credit scores before offering a job.
If we know more about credit scores and the factors that affect them, then we may be able to build a positive credit history. But how they are maintained by the various credit reporting agencies is the first thing we need to look at.
Equifax, Experian, and TransUnion are the three major credit bureaus that calculate credit scores. They sometimes come up with a different rating for various reasons even though they use the same methods and formula to calculate scores. A more updated information about an individual is what one agency may have. A creditor may have shared information with one agency only, but not with the others. While checking on our scores, creditors take the average of the three scores from these three agencies.
Credit scores range between 300 and 850. Excellent for obtaining mortgage financing at low interest rates is a score of 680 and above. A credit score of 621 to 679 is an average score and you would have to pay a slightly higher rate of interest. Having a credit score of below 600 would make us potentially unreliable and harder to obtain credit. Credit repair steps should be taken immediately when a credit score falls below 600.
These are the following factors affecting credit scores and basic steps you can take to maintain an accurate credit score rating with the credit bureaus.
You should regularly check payment history and the current debt/credit held.
Credit history length is a determining score factor. The longer a good credit history, the better naturally.
Old or paid off accounts should not be closed. Credit history length will be shown here and this will also contribute to higher credit scores.
Pay off debts to improve credit scores.
Making payments on time. Appearing on credit reports and adversely affecting it are delayed payments.
Having no bearing on a credit score is an individual’s race, sex, age, level of education, or marital status nor does the fact that an application for credit was previously turned down.
Enabling us to receive credit and loans at good rates is taking care to maintain a high credit rating. Our credit score is a reflection of how we manage our finances and a determining factor for many aspects of our lives. The best way to avoid bad credit and limited loan options in the future is knowing early on how to have a healthy credit history.
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Tags: credit, Credit Repair, credit scores, finance, personal finance