Your credit score will be a number between 330 and 830. It is a number used to gauge how responsible you are with money. The higher the credit score, the better. A good credit score is important because it will impact the loans that are available for you, and it will help you get better interest rates. There are several variables that will determine a credit score. It is always good for you to know what your credit score is.
Your payment history makes up 35% of your credit score. If you have a history of late payments, your score will be lower. A few late payments might not hurt your score a lot, but frequent late payments will be harmful. On the other hand, if you make your payments on time, your score will increase. Some of the types of late payments might include credit cards, installment loans and mortgage loans. When considering late payments, how far your score will drop depends on how late they were, how much you owe, how recent they were and how many there were.
Derogatory marks are major issues that have occurred in your financial history. These can affect your credit score for years, and you might have trouble obtaining a loan or new credit. If you have a bankruptcy in your history, it will have a significant negative impact on your credit score. Foreclosures, lawsuits, liens and judgments will also cause your score to take a big hit. These things stay on your credit report for 7-10 years. Just one of these can drop your score significantly, but more than one will make your score plummet.
Credit card utilization consists of how much of your available credit you are using. If you are using the maximum amount of credit on all your credit cards, your utilization will be high. When lenders see this, they determine that you have a hard time paying money back. Make sure you are paying as much as you can on your credit card balances. It is best to keep this utilization below 30% on each of your cards.
Check your Credit Score
You need to keep up with your credit score, so you will know where you stand. Credit Karma is a company that offers to give you your free credit score. The best part about it is that it is free. You do not even need a credit card when you sign up. You can track your credit anytime you wish. You can look at your credit utilization, derogatory marks and credit history. It is a great tool for evaluating your credit.
Your credit score can make a big impact on your life. Therefore, make sure you follow all of the guidelines to get your score as high as possible. You can then get a good loan and a low rate.