Why is it important to know my credit score? The credit score is a measure of your credit-worthiness, or your ability to acquire new credit. Credit scores can range from the lowest score of 300 to the highest, 850. If you have a low credit score, you may have trouble getting approved for loans or be charged higher interest rates on the loans that you get. A credit score below 600 is considered poor while one above 720 is considered good. How can I know my credit score?
Know My Credit Score – What are Credit Bureaus?
The first step to know my credit score is to be familiar with the different credit reporting bureaus. These organizations track the credit information of individuals and aggregate them into a credit report. The major agencies are Equifax, TransUnion and Experian, who collect the information from various creditors such as banks as well as public sources such as bankruptcy filings. Although the three agencies share information, they also create their own distinct credit reports, which is why it is important that if you want to know my credit score accurately you will have to ask for reports from all of them since you may get different results. We are all entitled to one free report from every credit bureau a year and only have to pay for additional reports.
Know My Credit Score – Why Is It So Low?
Once you look at your credit scores by looking over the credit reports, you may be surprised at how low they are. If you pay your debts religiously but your scores are still low, there may be errors in your credit report. If your credit score is too low, you can make it higher by disputing any errors you find on your report. For example, there may have been some debts that have been reported twice or ones that you’ve already paid but are still on the report and you know my credit score will be pulled down.
Know My Credit Score – How Is It Computed?
An important aspect to better understand your credit score is knowing how it is computed. Once you know this, you can take steps to improve your creditworthiness in order to raise your score. Thirty-five percent of your score is computed based on how promptly you pay your debts. If you pay on or before the due date, then your credit score should be high. Another thirty percent of your score is based on how much you owe vs. your total credit limit. If your total debts are close to your credit limit, your credit score will be low. Another 15% is based on your credit history or how long you’ve been availing of credit. The last 20% is divided between new debts and how many different types of credit you have so you know my credit score will be high if you keep credit cards active even if you don’t want to use them anymore. If you have a lot of new applications for credit, you know my credit score will be low due to an increased number of credit inquiries reflected on your report. And if you strive to have a variety of credit types such as different types of credit cards, then you know my credit score will be high.
