A credit score indicates whether or not a person is credit worthy, that is likely to pay their bills. The score is primarily based on credit reports prepared by major credit reporting agencies. When you apply for any loan other than payday loans the lending institution will use your credit score and report to determine whether or not to lend you money.
Since your score reflects how you manage your money and whether or not you pay all your dues on time banks and other institutions are able to decide whether or not to lend you money. So, you must get and maintain a blemish free credit report and score.
In fact it is a good credit score that will get you lower interest rates or a better deal when you avail a car or home loan for large amounts.
To get an unbeatable credit score you must:
1. Learn about financial planning from when young. Begin managing a savings account and student’s credit card well. This will form the basis of your credit report and score.
2. Know what a credit score is based on and read all the information given on web sites by Equifax, Experian, and Trans Union.
3. The key to a good credit score is to pay bills in time, defaulting on payments affects the credit report and score. So, either set up an online payment system with your bank with automatic payment disbursal or program your computer and mobile to give you reminders.
4. Try not to borrow unless essential. Credit reports study your borrowing patterns. Right from the beginning learn to live within your means.
5. Use credit cards with care. Never use up all available credit and only use the card’s minimal payment facility in an emergency. You must budget your spending such that you can pay your credit card bill in full at the end of the month when the bill falls due.
6. Periodically check your credit report for mistakes and ensure that you get them corrected.
7. And never close old accounts or credit cards as you will just land up erasing a credit history that you have striven hard to achieve.
A bad credit score can lead to several problems like refused credit, closure of credit cards, and inability to rent a home. Did you know your life is recorded by firms who map credit reports. They keep track of aspects like: employment history; insurance claims, insurance policies held; loans availed; medical records, rental history, home ownership; credit cards owned and used and more.
In general companies use 22 markers to calculate a credit score and the lowest possible score is 300 and the highest 850. The score is an average of:
It is not income but how you use money that affects your credit score. The higher the score the lower the credit risk , so you need to achieve and maintain a high credit score.
Aaron Brooks is a freelance writer for http://www.1888creditreport.com , the premier website for free credit report and credit score online information, credit history, credit score, credit reporting industry, advantage credit monitoring, credit report scores and many more. He also freelances for the premier Insurance Quote Site http://www.1888insurancequote.com