Super Fitness Health BlogTips To Boost Your Credit Score
When you’re applying for a car or a house, loan companies would assess your credit score. A credit score is a number, usually three digits, based on your credit history. This is made available to consumers by credit agencies such as Experian, Equifax, and Call Credit. The credit scoring methods of these credit reporting agencies are widely used in many parts of the world, like Europe and North America. In the United States, the most popular credit scoring model is the one made by FICO. Your credit score represents whether or not it is risky to lend you money and some loan companies will also make use of this value to establish the interest rate you’ll pay.
How do credit bureaus determine your credit score?
There are various variables assessed to determine your credit score, the bulk of which is your payment habits. In general, having a extensive history of making payments promptly, and not forgetting to make due payments on all credit accounts will give you a better credit score. The ratio of debt being used to total available credit is one more is another important determinant of your score. The frequency of inquiries made on your credit report is also considered and this can lower your score because several inquiries in a short period of time can pose as a significant risk to loan companies. Your mix of credit cards and loans will also be examined.
When using the FICO model, a credit score range that would be favorable to you is between 720 and 850. Scores under 600 are bad, and this can make securing a loan somewhat challenging. If you are not in that good credit score range at the moment, do not feel to stressed out, there are ways to help you improve your score.
Tips to increase your credit score
A considerable part of your credit score will be derived from your payment history, so making a habit of paying your obligations on time will have a considerable impact to your score. The scoring technique also puts importance on recent activity, so even half a year of being conscientious with your payments will have a positive impact to your report. If you have several credit cards, remember to rotate them because dormant ones will not contribute to your score. Then again, it is also a red flag for lenders for you to have over five credit cards or open many accounts simultaneously.
Still, the best, and the fastest way to increase you credit score is to settle your debts. If you can remember one of the things assessed in determining your credit score is the amount you currently owe relative to the total amount of available credit. Using a smaller portion of your available credit can help you receive a much higher score. To know more about credit scores, you can visit this link.
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