subject: Sure Fire Tips To Help You Understand Your Credit Score [print this page] You are ready to buy your first houseYou are ready to buy your first house. You have found the home of your dreams. You have enough for the down payment put aside, but before you can call the place your own, one thing stands in your way. Your credit score. Here you will learn what a credit score is and how it works for or against you.
To start off with, you need to understand what it is. Your score is a value that companies who you have built a spending relationship with use to describe your reliability and length of time that they have been in relationship with you. If you have shopped at a particular store for some time, using their store credit card, and made regular payments on that card, chances are you will have a good score from them. However, if you did not pay your landlord and the electricity bill in a timely manner every month, your score may be affected negatively.
How is it determined? Attributing a value to a number of different credit issues, a credit score is determined in this way. According to one credit model, your score is determined in this way. Thirty five percent of your score is based upon your payment history. Another thirty percent is based on your debt ratio. Fifteen percent is given to how long you have had a history with that company. The types of credit and the number of credit inquiries are valued at ten percent each.
Some other things can have a negative impact on your credit score. Believe it or not, regularly checking your score can make you seem like a bad credit risk. So, before you get financing for your big purchase, get a reliable, trustworthy credit agency or bank to approve you in advance for your big ticket item.
How you can improve a bad score: If you already do not have great credit, you can improve your score by reducing your spending on your credit cards and other kinds of credit so that they value less than thirty five percent of your allowable credit. This can improve your credit score quickly. If you have high account balances, do your best to pay them down quickly to that thirty five percent margin. If you have a lot of credit cards, consider closing a few cards down (especially your newer ones) and reducing your allowable credit limit.
For those with good credit, it is easy to maintain. Just keep doing what you are doing. Continue to pay your bills on time. Continue to keep your debt ratio low. Continue those long term relationships with good creditors. Do not be tempted to get new and more credit cards.
The advantages of having good credit are rewarding indeed. Not only will you be able to purchase that house of your dreams, you will be able to take that trip that you've been dreaming of. Also, banks and lawyers and employers will look favorably upon you, giving you terms that those with less favorable credit scores could not get.
Armed with these tips, you can correct a poor credit score, and get or maintain a good credit rating. And that, for certain, will make life much easier for you and make you smile.
