What is the meaning of your credit score?
Posted by Mords1944 on May 9th, 2020
In the United States, your credit score is everything. It is something you must take care of. If you don't, connecting a phone, cable, or gas line to your home can be difficult to do.
There are also certain companies that take a look at your credit score first before you even hire it. Even if you are qualified to do the job, a low credit score can ruin everything.
Your credit score is also analyzed by creditors, such as banks and credit card companies. Just try to imagine that you need to get a loan to start your own business, with a low or bad credit score, you are less likely to get that loan approved, or you can get it approved but with high-interest rates.
The same is true when applying for a credit card. Credit card companies or banks that issue credit cards will first take a look at your credit score before they can approve your application. A high credit score means that you are more likely to get the best credit card deals with many features and also low-interest rates for every purchase you use with a certain credit card.
Even if you are applying for a mortgage, car loan, and other types of loans, your credit score will play a big role. That is why it is very important for you to have a high credit score and keep it that way or increase it.
First of all, you need to understand what a credit score really is.
A credit score will be a three-digit number from 300 to 850. This number will represent an estimate of how likely you are to pay your bills or not. This means that if you have a high credit score, creditors will ensure that you have better credit risk than someone with a low credit score.
In the United States, FICO (or Fair Isaac Corporation) is the best-known credit score model in the country. They calculate their credit score using a formula developed by FICO. The system is used primarily by the consumer banking and credit industries across the country.
Credit scores are calculated using the following factors:
Timeliness of payments
This will be 35% of the calculation. If you pay your bills on time or before the due date, your credit score will tend to be higher.
This will equal 30% of your Shop SImplio credit score calculation. It will contain a ration between current revolving debts and the total revolving credit available. If you use your credit card and don't use your entire credit limit, you will get a higher credit score.
Length of credit history
This will equal 15% of your credit score calculation.
Types of credit used
This can affect 10% of your total credit score.
Recent credit search or recently obtained credit amount
This will equal 10% of your total credit score calculation.
Surprisingly, not many people know their credit score and often end up wondering why their loan or credit card application was denied. You can easily obtain a copy of your credit report by requesting it from the three major credit reporting agencies. The law allows you to request a copy of your free credit score from each of the nationwide consumer reporting companies every 12 months.