How To Interpret Your Credit Score
Your credit score is a summary of your financial decisions in the form of a three-digit number. Most lenders, employers or even landlords often take a look at a person’s credit score before deciding whether or not they can lend you money. Hire you or lease you a place. Your entire credit history is summed up by your credit score and it gives people your worthiness or reliability when it comes to credit. Credit score ranges between 300-850 and the higher your credit score is, the more financially trustworthy you are deemed.
Credit score greatly influences the decisions of lenders and other people looking into your credit history. Your payment history, length of debt and total debt are all factors that influence your overall credit score. The most commonly used credit score system is the FICO and it is considered the universal credit score model.
Factors Affecting Your Credit Score
There a several factors that influence how high or low your credit score is going to be. The following are the main factors taken into consideration when summing up your credit score.
Interpreting Your Credit Score
After all, this is recorded and the relevant information selected, your credit score is then calculated into a three-digit number ranging from 300-850. Each number is interpreted differently, depending on how much it is. The normal FICO interpretation is:
○ 800-850: Excellent
○ 740-799: Very Good
○ 670-739: Good
○ 580-669: Fair
○ 300-579: Poor
Credit score not only gives people your financial background and reliability, but it also affects the amount of money you’re expected to pay in debt and interests and a poor credit score can hinder you from job opportunities, mortgage and taking out loans.
How to Increase Your Credit Score
It is imperative to maintain a good credit score at all times and if you do notice that your credit score is low, you may employ a few techniques to raise it:
○ Make all payments on time
○ Increase your credit limit
○ Avoid closing credit card accounts
○ Don’t miss any payments
○ Opt for automated payments
○ Regulate your credit card usage
At the end of the day, your credit score depends solely on you and if you do not work for it, you’ll surely suffer the consequences. The importance of having a good credit score goes beyond taking out loans to affecting your daily life. Start working on your credit score today, remember it won’t take overnight but a few steps in the right direction will do the trick.
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