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Credit Report Score
Somewhere Between 300 and 900, There are Thousands: Know What the Credit Report Score Means
Your credit report score will be a number falling between 300 and 900. The higher the number, the better. Higher numbers generally mean that you can get a lower loan and mortgage rate when you apply for student loans, car loans and home loans. Your credit score is made up of an equation, which is outlined below. In order to get a credit report score that is high, it is important for you to understand what you are being assessed by.
35% Payment History
The results of your credit report score will be based 35% on your payment history. How did you pay your bills? Were you ever sent to collection? Did you pay bills on time? Do you have any bankruptcies? While most people have some late paid bills, it is important to stay away from collection and bankruptcies in order to maintain a high credit score.
30% Based on Debt
Your credit report score will factor in 30% of your score based on debt. If you still owe money, then it is important for you to pay it down. Loans, such as car and home loans, are considered debt. You should also assess how many credit cards you have. If you have many credit cards that are at their limits, then your credit score will also be lowered. (Hint: Try to keep your credit card balances at 25% their limit in order to keep a low credit score.)
15% Based on How Long You Have Had Credit
If you have had credit for a longer amount of time, your score will be higher. This is because lenders will be able to judge your history more accurately than if you just opened up a credit line. Make sure that you pay off bills even when you are young so that you can establish a smooth track record of credit.
10 - Inquiries Into Your Report
Believe it or not, 10% of your credit report score is based on how many inquiries you have had into your credit score. Because an inquiry is opened every time you apply for a credit card or loan, it is a wise idea to keep your applications low. Even if you never actually get and use a credit card or loan, the assumption is that f you do apply and get a credit check, then you may be in financial trouble.If these inquiries are recent, your credit score will be even lower than if they were in the past.
10% - Type of Current Credit
Finally, 10% of your credit report score is based on the number of loans that you have and the available credit card credit.
Your credit report score is very important in helping you get a low interest rate when applying for a loan, credit card and mortgage. Make sure that you check your credit report score every few years to prevent identity theft. Do not apply for many credit cards. Pay bills on time and try to stay out of debt. If you follow all of these tips, then you have a good chance of getting a high credit report score.