Four Damaging Myths About Your Credit Score

 

For the majority of people, credit scores remain to be a mystery. Many of us know 800 is a high score, 700 is acceptable, and anything below 600 is considered to be bad. But what actually determines the number? What is the main factor that influences this number with the potential to provide you with the house or car that you've always wanted or smash them to oblivion?

Credit scores, which are also known as an FICO score is calculated based on a lot of different data from your credit report. There are three FICO scores, one per bureau, which is three: Experian, TransUnion, and Equifax. Each score is based upon information the credit bureau keeps on file for you. When the information contained in your credit reports changes your credit score is likely to alter as well. Your three scores impact the amount of credit given to you, and on which conditions (interest rate, etc.). After bankruptcy, your scores are likely to be quite low however, you can do things to build your credit score, which will increase your FICO score.

What is required before your FICO scores can be calculated? In order for your 3 FICO score to count for calculation, each of your three credit reports should contain at least one account that has been open for six months and then updated within six months. This is to ensure there's enough information from the past six months in your credit report to determine your FICO scores.

What factors influence the scores?

1) Your payment history. This will likely to be the biggest factor that affects your credit scores. Your payment history includes every type of account (credit cards installment loans, retail accounts as well as finance company accounts like mortgages and mortgage.) and whether or if you paid each account on time , and the amount. If you're past due on any accounts it will be reflected within your history of payments. The severity of the delinquency is also recorded. Included in the payment history are any adverse legal actions against you like judgments, foreclosures, liens, garnishments, as well as collection items.

2) The total number of accounts you've opened and paid on time is also recorded.

3) What kind of credit lines that you can access. Credit cards that are revolving like credit cards as well as installment credit like loans are essential in determining your score on credit. If you are using credit with a revolving nature, are using up all your credit cards or are you within your credit limit? If you have installment loans, how much do you owe on the amount of the loan?

4) The duration of the credit history. Another important aspect is. How many accounts do you have open and for how many years? How recent is your activity on your account?

Five) A new line of credit. How many recently opened accounts do you have? How many recent inquiries have you seen for your credit history? (hyperlink to soft and hard inquiries). If you've had a re-establishment of a positive credit score after bankruptcy, it will be noted in addition view it now.

6) What kind of credit do you have? Are you using major and retail credit cards? Do you have installment loans such as auto loans and mortgages?

Your FICO scores are calculated by taking all information that falls within these categories into account. No one factor alone determines your score. Your credit report examines all of your financial records to determine your score. It's difficult to determine exactly how crucial any one element is, let alone the levels of importance shown below apply to the general population. They will also differ in different credit scores. What's important is the mix of information that is different from person to person and also for any individual over the course.

While the FICO score is a crucial factor in your financial life, However, it's important to note that lenders will be looking at other elements, like your earnings and how long you've worked at the job you are currently at.