Personal Finance

What is my credit score?

A credit score is a numerical representation of your credit history. It can help lenders determine whether you have good, bad or no credit. Your credit score will have a great impact on the loans you are able to get and the interest rates you are able to secure on any given loan.

Your Fico score is a number computed from your credit history. A fico score below 600 is considered in the bad credit range, and you should seek measures to repair your credit. A Fico score above 700 is considered good and thus you can benefit from low rates on the loans you get.

A credit score gives lenders looking at a credit report an easy way to judge if an individual has poor or good credit. A credit card company, for example may get hundreds of applications everyday. Rather than having to scan the whole credit report, a credit score can make it easy to judge a person’s financial standing.

It is important to maintain a high credit score from the start, so that you can economically finance the purchase of your car, house and other items you may need throughout your life. Your credit score should be maintained from the moment you get your first credit card. Many college students spoil their credit score during their years in college and have a hard time with their purchases when they graduate. Therefore you should be conscious of your credit score from the beginning.

A credit score will get increased or deducted depending on the financial transactions you make. For example timely bill payments will increase your score whereas delayed payments will have the opposite effect. Other things that may affect your credit score are:

The length of your credit history. If you have a longer credit record, creditors will have more history to determine the amount of risk they will be taking. People with no credit history will have a tough time acquiring loans.

The number of inquiries on your credit score. If a large number of people look at your credit report, your credit score will drop slightly. Therefore it is important to be selective when applying for a loan.

The amount of debt you have. Seeking debt management solutions and reducing your debts can help you greatly improve your credit score.

Your credit score is continuously being updated as you carry out financial transactions. If your credit score is below 600, you should look into the option of conducting credit repair. With a high credit score, you can save thousands of dollars on loan repayment. Therefore it is in your best interest to maintain a good credit score and avoid transactions that can damage your credit score.