Your credit score is an essential number when it comes down to the fact of you applying for and being accepted for credit, it is classed as being as important as your social security number and it is essential that you understand it and what it does.
Your credit score will consist of a three digit number which shows a lender a quick and accurate guide as to how big a risk you are seen to be. This of course determines from the onset how likely you are to be turned down or accepted for any form of credit, it is always the first factor that is taken into account by a lender and in the majority of cases it is the only factor and especially so if you have a low credit score.
Your credit score is based on a mathematical formula which says that your past credit history will predict your future, for example if you have made late payments or have missed payments in the past then the probability is high that you will do so again in the future. A computer will predict your credit score and it will do so from the information which is listed in your credit report. Your credit report holds such important information as your payment history, the total amount of credit that you have outstanding at the moment, the amount of credit that is available to you and how many times you have applied for credit in the past.
Points are then awarded on certain aspects of your credit report with some parts of your credit rating being taken into account more than others. As a general rule of thumb your payment history goes towards 35% on your score, the amount of credit that you owe out covers around 30%, 15% accounts for the length of your credit history and 10% for the types of credit that you haven taken. There are many different types of scoring but they are all based on this same principle.
While it is essential that you keep your credit rating in good stead to ensure that you are given a good credit score if for some reason you do have a poor score then all is not lost, you can repair your credit rating. The score that you do have fluctuates depending on circumstances, it doesn’t remain the same and you are able to do many things to bring it back up to an acceptable level. Your credit score can even change on a daily basis and it can also vary between the three national credit bureaus, when checking out your credit rating you should have a 3 in 1 report as this ensures that you have the most accurate information regarding both your credit rating on the whole and the score which is derived from the credit rating. There are many online sites where you can obtain your credit rating and also obtain your credit score and it is essential that you do obtain a report every now and again to make sure that a mistake hasn’t been made in the system which could affect your score.
Your credit score is an essential number when it comes down to the fact of you applying for and being accepted for credit, it is classed as being as important as your social security number and it is essential that you understand it and what it does.