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Deciphering Your Credit Score
By Lee Dobbins
If you are trying to rent an apartment, borrow money for a car, a home or even get a credit card, your score can have a major impact on whether you can borrow, how much you can borrow and even your interest rate. Understanding your score is important but there are a lot of numbers and confusing wording that can make this a challenge.

A credit score is a mathematical system that consists of many numbers that are used to gauge your credit risk. The most commonly used form for this is called the FICO score. This score is used to evaluate your worthiness for credit. To evaluate your score, you get a certain amount of points based on the information that is listed in your credit report. The highest score possible is 850 and the lowest is 300. A score of 650 or higher generally means that your credit is pretty good, however, until you reach 850, there is always room for improvement.

If your credit score is 700 or above, then you are considered to be an excellent credit risk. You should have no problem getting any kind of credit and will most likely be offered a lower interest rate for most of the credit financing. Therefore, it is advisable for everyone to strive to obtain a 700 or higher credit score in order to save money on your mortgage, credit cards or other personal loans.

There are three major credit-reporting agencies that will play a big part in your credit. These three are Experian, TransUnion, and Equifax. Your credit score may be different for each of the credit bureaus because they do not have the same information about you and each uses a slightly different method of calculation.

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are a few things that are reviewed by companies in order for them to compose your credit score. They look at your past payment history. How well you pay your bills and when you pay them. They pay close attention to your outstanding debt. If you have too much debt, your score will be lower. It is also composed of how long you have had your credit history. If you are just starting out, your credit score may be lower even though you do not have any bad points on your report.

Your recent credit applications will also be reflected in your score. If you have too many credit applications made, this will look bad on your report. You should also think about what types of credit and loans you have. You do not want to have a lot of high balances on your credit report. These balances along with high interest rates will go against you and decrease your score.

If your score is lower than you want it to be, you should take measures to improve it. You can buy many books and tapes that will show you some great ways to improve your credit. There is also credit card counseling services that you can obtain in order to get good advice for fixing your credit score yourself.

No matter what your credit score is you should sure that you check your credit report once a year. This way you can insure that everything on your credit report is accurate. Review the information carefully, and if there is anything on there that is questionable, dispute it and have it removed from your report. That way you can be sure there will be no surprises next time you want to finance a major purchase.

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