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Lenders and creditors use a credit scoring system to determine
if you would be a good risk for their lending services. Your
credit score is determined by an evaluation of your credit
report which gives the details of your credit history and
credit worthiness. This information is gathered and put through
a statistical program which compares your history against
the loan repayment history of others with a similar profile.
In essence a credit score is a number assigned to you by a
reporting agency to indicate your risk level. The higher your
credit score, the less of a risk you are. Your score will
vary from one reporting agency to another.
Your credit report is directly related to your personal credit
score. Your credit score and credit report helps determine
whether or not a creditor will provide you with credit or
not. Your credit score is the primary factor in deciding what
terms you are offered or the rate you will pay for a loan.
Therefore, it is very important for consumers to keep an eye
on their credit report and make efforts to ensure a positive
report. As consumers, were in control of what happens on our
credit report. If you want to save money by receiving lower
interest rates, than you need to be in control of your credit
report.
There are many factors considered when computing a credit
score. Some of the things you have direct control of to ensure
the safety of your credit score include the following:
- Payment History -
Paying your bills on time is a major factor when determining
your credit score. If you have gotten into the habit of paying
bills late, you will boost your credit score if you begin
to consistently pay your bills on time.
- Length of Credit History -
People without credit history have a hard time getting a loan
because they have nothing to base their credit worthiness
on. The length of time you have had credit is a factor in
calculating a credit score. This is also why you don't want
to cancel those old credit cards that you do not use. A credit
card that has been open for a long period of time is a good
thing when it has a positive payment history.
- Available Credit -
While it is true that it is good to have established credit,
too many open credit card accounts can have a negative effect
on your credit score. This is another good reason to keep
up on your credit report. If you are watching your credit
report you will know what accounts are open and how many there
are.
- Amount of Debt -
Try not to use all of your available credit. A maxed out credit
card does not look as good as say, three credit cards with
only 25% of the available credit used on each one. Of course
this should be coupled with a solid payment history to enhance
your credit score.
- Inquiries -
On your credit report you will see a section where it discloses
recent inquiries. Applying for too many new accounts in the
recent past may have a negative effect on your credit score.
Also when you are thinking about purchasing a home or renting
an apartment it seems that everyone wants to run a credit
check for you. Be sure that you really are interested in living
there before allowing them to run your credit.
To Learn more about Free
Credit Repair Visit www.youfixyourcredit.net
Learn how to get your totally free credit report and how you
can fix your credit.
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