In the United States, a credit score is a three-digit
number based on a person's past credit files, and
represents that person's creditworthiness. The score is
based primarily on credit information obtains from the
three major credit bureaus, and the credit score determines
the likelihood that a person will pay his or her bills on
time. FICO is a credit score developed by Fair Isaac & Co.,
and it is used by many mortgage and lending companies to
determine the possibility of a client defaulting on
financial obligations to the lenders.
A credit score is determined by past credit history, and it
must be built up from scratch. Many different factors
determine what your credit score will be, including number
of accounts or loans, amount of total loans and debt, and
even the length that the various accounts have been open.
Whether or not payments are made on time consistently will
also determine a credit score, as well as any negative
marks including bounced checks or going over an account
balance on a credit card. Because a credit score is
important for trying to get loans, avoiding negative
activity is important to build up a good credit score.
A good credit score is necessary when wanting to buy a home
or property that requires a mortgage company, since many
companies won't lend to those who are a high risk for not
paying it back. A low credit score can also impact those
renting a home, since landlords would rather rent to
someone who has shown they can pay their rent on time. A
poor credit score can cause you to be denied by several
types of lending companies, because a low credit score
means the applicant is a high risk for defaulting on loans
and financial obligations.
Because not everyone in the world has a perfect credit
score, there are many companies that will still lend money
to those with poor credit scores. Although this may seem
like a credit score doesn't mean anything since almost
anyone can get a loan, but it's completely the opposite.
Those with low credit scores will end up paying much more
in the long run, since credit card and mortgage companies
charge higher interest to those with lower credit scores.
Having a good credit score can save you money by avoiding
high interest charges, and can also give you the ability to
apply for almost any loan or credit card that you wish.
Credit card companies that require their customers to have
good credit scores usually offer great benefits, including
balance transfer options and even rewards programs. Those
with good credit are also typically approved for a higher
loan, giving them the ability to buy whatever they may want
or need before they have the money available.
Having a good credit score is a great way to save money and
enjoy the ability to take out a loan, but it can be
devastating for those with low credit who end up with
outrageous interest charges. Having a low credit score
isn't the end of the world though; it can quickly be
improved by keeping negative marks from your credit report.
Make sure to make all of your monthly payments for loans
and bills on time each month, and avoid taking out too many
loans or credit cards. Try to lower your total debt each
month rather than paying off a card and then charging it
back up, since high amounts of debt can decrease your score.
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Other credit report information articles by Anthony Smith
at:
http://creditreportinformation4u.com
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