Determining how much we live our lives is our credit scores. We use our credit to buy practically everything. 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. Helping to determine what various agencies will charge for their services is a healthy credit score. Today, personal credit scores are even checked by employers before offering a job.
It is possible for us to build a positive credit history as long as we know more about our credit scores and the factors affecting them. But how they are maintained by the various credit reporting agencies is the first thing we need to look at.
Three major credit bureaus – Equifax, Experian, and TransUnion – 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. Although shared information is what a creditor may have with one agency, he won’t have shared information with the others. Creditors take the average of the three scores from these three agencies while checking on our scores.
When it comes to credit scores, they range between 300 and 850. If you have a score of 680 and above, then it is excellent for obtaining mortgage financing at low interest rates. You would have to pay a slightly higher rate of interest if you have a credit score of 621 and 679 since this is an average score. Making us potentially unreliable and harder to obtain credit is a credit score of below 600. Credit repair steps should be taken immediately when a credit score falls below 600.
Keep reading to learn the factors affecting credit scores and the basic steps you need to take to maintain an accurate credit score rating with the credit bureaus.
Routinely check payment history and the current credit/debt held.
The length of credit history is a determining factor. Naturally, the longer a ‘good’ credit history, the better.
You should not close old or paid off accounts. These contribute to higher credit scores and will also show the credit history length.
Debts should be paid off to improve credit scores.
On-time payments. Delayed payments appear on credit reports and adversely affect it.
When it comes to credit score, the fact than an application for credit was previously turned down has no bearing nor does an individual’s race, age, sex, level of education, or marital status.
If we take care and maintain a high credit rating, then this will enable us to receive credit and loans at good rates. Our credit score is a determining factor for many aspects of our lives and it is also a reflection of how we manage our finances. How to have a healthy credit history is what we need to know early on as this is the best way to avoid bad credit and limited loan options in the future.
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