Definition of a credit score

A credit score is a numerical rating based on relevant factors measuring a borrower’s willingness to repay a loan. Your credit score is calculated from the information in your credit profile which is a record of your credit activities over time. This score predicts your credit performance. The higher the score, the better credit risk you are.

The FICO score is the most popular credit scoring system developed. You may obtain your FICO score from any of the three main credit reporting agencies Click Here (it is advisable to monitor all three to ensure current and accurate data ): Equifax (800) 685-1111 Experian (888) 397-3742) Trans Union (800) 916-8800

Since a credit score is from credit history, there must be at least a 6 month history to get an accurate score. You must have at least on account that has been open for at least 6 months and has activity in those six months.

You would have to develop a credit history to be eligible to apply for a mortgage. If your score is too low, there are ways to raise your credit score . However, it is almost impossible to improve it in a short time period. It is important to employ credit habits that will ensure a high credit score at the time you most need it. What are the relevant factors considered in a credit score?

The credit score is only interested in a borrower’s willingness to pay back the loan. It predicts the likelihood that the loan will get repaid based on the accumulation of the borrower’s past performance and current standing. Such information as savings, income or demographic data like nationality, race, religion, marital status, and gender are specifically left out of the credit profile. It is not meant to measure the borrower’s ability to repay the loan. For that, the lender looks at your debt-to-income ratio .

The credit report does track both the positive and negative activity in your credit history, such as timeliness of payments, current debt balances, length of credit history, types of credit available to you, the number of credit inquiries and any legal action taken against you for non-payment (such as bankruptcy or a lawsuit.) Although late payments will reduce your score, a current history of timely payments can raise it.

Different weights are assigned to factors that are considered. Such as FICO assigns 35% of your score to your payment history, 30% to your debt level, 15% to the length of time of of you history, 15% to the type of loans you have and 5% to your credit score requests, which measure your level of pursuit after new credit.

Your credit score is very important. It is used to consider applications for credit, loans, mortgages, insurance, and even employment. It is very important to maintain a high score and ensure accurate reporting.

How can I raise my credit score? Raising your credit score is a task that must be accomplished over time. The credit score is an assessment of credit history factors. Therefore, it is generally impossible to change your score during the short period of time you are applying for a loan. As such, it is important to be aware of the positive and negative variables that affect your rating so that you can improve your credit score before you need to use it as a tool to obtain a loan. You can improve your credit score a little each year (by as much as 50 points) by careful management of your credit obligations. Develop habits that promote good credit history (make payments on time, pay down cards leaving available balances, etc) Monitor all three credit reporting bureaus (to ensure accurate reports ) Obtain credit reports annually and request corrections in writing. Click Here to get yours. Negative Habits Don’t request a series of credit checks in a short period of time lenders presume unstable credit conditions. Don’t take on more credit than you can consistently manage. Don’t max out your credit cards Don’t spend beyond your ability to pay Don’t quit building credit because of a setback such as a bankruptcy, go to work re-establishing credit (even a small consumer loan allows you to rebuild a good payment history) Many lenders are more concerned with what you have done since a derogatory incident than what happened before, say, a bankruptcy. Don’t leave errors undisputed; request corrections in writing

You can download your credit reports here Click Here.