What is my credit score? My credit score is a figure given by a credit report after taking my credit-worthiness into account. This figure makes it possible for the lending institutions to judge my ability to pay back the money quickly that they have loaned to me. A credit score is used as a yardstick for apartment rentals, employment, loans and mortgages. The credit scores are also useful when I apply for a credit card. A poor score can cost me directly a lot more money by higher insurance and interest rates.
Many people are scared of tackling the problem of their credit. The factors that go into calculating a credit score are quite complicated. Reporting agencies use their variations on the credit score formula. This three-digit number can establish whether I get my house or car on credit.
What is my credit score and how is it Calculated?
What is my credit score? What are the general factors that go into calculating my score? The credit score is a figure that measures the risk that I pose to a lending company financially. It is the history of my payment of the bills. It determines whether I pay my bills on time or delay the payment. Next is the factor of debt and how much I have to pay off right now. Then comes the age of the accounts and how long I have maintained credit. Also taken into consideration are the variety of accounts and how many accounts I have opened recently.
What is my Credit Score Repair Work?
How does credit repair work? It is the process where a company uses certain measures to improve my credit score. There are companies which are in high demand to fix problems of credit scores since these scores can affect so many things in my life. Repairing credit is not an easy matter. As a large percentage of credit files have errors, credit repair companies can help in removing them. These companies also figure out what part of my score is in need of improvement and they will make the necessary efforts to improve my credit score. They have direct contacts within credit bureaus which can help them remove the bad credit information easily.
There are ways to improve my credit score such as paying bills before their due dates. If I cancel a credit card that carries a high limit and a low balance, it can damage my credit score because credit bureaus use the ratio between my available credit and how much I owe and this influences my debt-to-credit ratio.
What is my Credit Score Inquiry Impact?
It is imperative that I should keep a close watch on my credit score to avoid errors and identity theft but at the same time, I cannot overdo the inquiries. As per the Fair and Accurate Credit Transactions Act, I am in a position to take a free look at my credit report and credit score once a year from each major bureau. The three major credit reporting agencies have given access to me through AnnualCreditReport.com to exercise this right.
What kind of inquiries will hurt my credit score? There are hard enquiries and there are soft enquiries as per the reporting agencies. A hard inquiry is made when a company has a genuine business reason to look into my credit report. This happens when I apply for credit and the company wants to know if I am reliable enough to do business with. A bank may decide to do a hard inquiry if I am trying to open a savings account with them. Sometimes, hard inquiries may knock off about five points from my credit score which I will be able to earn back after perhaps half a year. Some loan applications may be worth the points I lose.
Soft inquiries have no effect on my credit score. Potential employers may do a soft inquiry when they decide to hire me. Companies making soft inquiries will see a limited report. What is my credit score inquiry impact? The number of inquiries on my credit report has a bearing on my credit score.