Credit Score Basics: What Affects Your Score
Even if you’ve never had a credit card, chances are that many financial institutions have plenty of information about you. A credit score is a number that banks and other lenders use when they consider whether or not to loan you money. The score predicts the likelihood that you will pay off the amount due in full per the terms of the contract.
Where to Get Your Score
You can get your credit report from all three of the major credit analysis companies: Experian, Equifax and Transunion. If you find that your FICO score is not as high as you had hoped, you can take action to improve your credit. Improving your credit makes it more likely that you will be able to get a loan or receive a lower interest rate when you borrow money.
To get your credit score, you can call one or all of the credit bureaus or visit their websites. If you are applying for a loan, you can also find out your credit score through the lender when the lender looks up your financial information. The bureaus update their information every 30 days.
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What Determines Your Score
There are many factors that play a role in your credit score. Each reporting bureau uses a slightly different model to come up with a number rating. One big part of your score is your payment history. On-time payments for your electricity, television, internet, and other utilities are a big part of the score for most people. A good payment history for student loans or a car loan also counts.
Your credit utilization ratio is also important. If you have a credit card with a limit of $2,000, and your average balance is $1,800, you have a 90 percent credit utilization. The higher the ratio, the lower your credit score will be. The number of accounts you have and the age of the accounts are also important to your FICO score.