Determining how much we live our lives is our credit scores. We use our credit to buy practically everything. When we apply for a loan, we can receive reasonable interest rates with the help of our good credit scores. in fact, since credit scores are a reflection of our financial health, everyone looks at our credit scores, from landlords to insurance companies to utilities. A healthy credit score may determine what various agencies will charge for their services. Today, even employers check personal credit scores before offering a job.

It is possible for us to build a positive credit history as long as we know more about our credit scores and the factors affecting them. But first, let’s look at how they are maintained by the various credit reporting agencies.

Equifax, Experian, and TransUnion are the three major credit bureaus that calculate credit scores. in order to calculate scores, they use the same methods and formula but there are times they come up with a different rating for various reasons. A more updated information about an individual is what one agency may have. Although shared information is what a creditor may have with one agency, he won’t have shared information with the others. Creditors take the average of the three scores from these three agencies while checking on our scores.

Ranging between 300 and 850 are credit scores. if you have a score of 680 and above, then it is excellent for obtaining mortgage financing at low interest rates. you would have to pay a slightly higher rate of interest if you have a credit score of 621 and 679 since this is an average score. A credit score of below 600 makes us potentially unreliable and harder to obtain credit. When a credit score falls below 600, credit repair steps should be taken immediately.

The following are factors affecting credit scores and basic steps to take to maintain an accurate credit score rating with the credit bureaus.

Routinely check payment history and the current credit/debt held.

The length of credit history is a determining factor. Naturally, the longer a ‘good’ credit history, the better.

You should not close old or paid off accounts. these contribute to higher credit scores and will also show the credit history length.

Pay off debts to improve credit scores.

On-time payments. Appearing on credit reports and adversely affecting it are delayed payments.

An individual’s race, sex, age, level of education, or marital status has no bearing on a credit score, nor does the fact that an application for credit was previously turned down.

Taking care to maintain a high credit rating enables us to receive credit and loans at good rates. Our credit score is a determining factor for many aspects of our lives and it is also a reflection of how we manage our finances. The best way to avoid bad credit and limited loan options in the future is knowing early on how to have a healthy credit history.

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Tags: Banking, credit, credit cards, credit repair, Credit Scores, debt consolidation, Debt Relief, finance, Finance and Credit, Finance and Loans, Financial Planning, loans, personal finance, Wealth Building

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