Many consumers have no notion what a credit score is comprised of. What are they measuring and how does this number relate to my creditworthiness? While common sense tells us that paying our bills with time to spare is an essential factor what else is significant when it comes to credit scores?
A credit score is just a numerical measurement of certain statistics. It is alleged to inform the lenders about the risk factors of the borrowers. Higher scores are considered a lesser risk while lower scores are considered to be a higher risk. Scores above 700 are considered excellent credit risks and scores below 600 are considered to be bad risks.
Credit scores are based upon a variety of factors and these factors can adjust often. You may have a low credit score yet have never been late on a payment. Other factors can have an effect on your score and bring it down. Different types of credit are looked upon more confidently than others and if you have too many credit inquiries on your account that will also affect you negatively.
Here are the factors that will change your credit score. 35% is based upon your prompt payment history. Only payments beyond 30 days late are counted as harmful. 30% is your debt to credit ratio or the total of debt you have accrued compared to the amount of credit you have available. 15% is the duration of your credit history. Of course, the longer your record the more constructive it is. 10% is the type of credit used. Consumer finance debt is considered to be damaging while credit card debt, car loans, and mortgages are more of a positive. 10% is how many new inquiries are on your report. Having too many inquiries is considered harmful.
If you want to jack up your credit score, it is advantageous to be conscious of these issues and use them to your advantage. Make sure that your payments are all made on time and do not charge or use more than 35% or your existing credit. Stay away from consumer finance companies and department store credit cards and do not let anybody inquire into your credit report unless you absolutely must.
You can raise your credit scores and repair your credit. There are professionals that specialize in credit repair or you can do it yourself but be aware that you have the right to question negative credit and negative credit scores.
Don’t battle with low credit scores any longer. Get knowledgeable and take action to raise your scores and repair your credit.
