How Your Credit Score Can Get You Better Rates
Keywords: credit, credit score, credit report
Any time that you think that you may want to make a larger purchase such as a house or a vehicle it is wise to make frequent checks to your credit score. Even when you are not thinking about making large purchases you should check your credit score about every year or so.
When you are making large purchases though lenders look at your credit score and make decisions as to whether or not they will extend your limit or grant you an incentive. By checking your credit score often you will be able to avoid any possible hidden problems.
What does your credit score consist of?
Payment history-35%
Shows if you have been paying your bills on time
It is important to have a good payment history
Liable amount-30%
How much do you owe
What type of account have you taken
Appraisal longevity-15%
The longer the history the more points you accumulate
Indicates how long the accounts have been used
New credit-10%
New accounts that you have opened
How long it has been since you have opened them
Overall mix-10%
The whole of your report and includes:
Credit cards
Installment loans
Mortgage applications
Also look at the amount of your salary to make sure you will be making enough money to cover any future credit purchases.
The Fair Isaac Corporation (FICO) is the one that developed the most widely known software calculator in the 1960’s. This calculator is used to calculate your credit score. It is found to be the most accurate, however, it is not perfect, so as with anything errors can occur which is yet another reason that you should stay on top of your credit score.
It is beneficial to keep up to date on your credit score not only can mistakes happen but you are being compared to thousands of other people with calculations following of a future appraisal risk specifically about you. By keeping a close eye on your credit report you will be able to tell if a mistake has been made more than likely.
Equifax, TransUnion, and Experian are three major United States agencies that use FICO. By checking on your credit score these agencies can determine if you are a good “risk” for them. In other words, they can decide if they will get their money back if they should loan you some. The more points that you have the more likely it is that you are a good risk. It is also more likely that they will offer you more perks. The perks can include lower interest rates.
Gregg Hall is an author living in Navarre Florida. Find more about this as well as avoiding bankruptcy at www.bankruptcyalternativeplus.com
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