Whats my credit score
What is your credit score and what does it mean. Lenders look at credit scores now more than ever to determine your interest rate. The higher your credit score, usually the lower your interest rate on a loan, this in turn can save you hundreds or even thousands of dollars each year, so it is important that you know your credit score and how to obtain the highest possible score on your credit reports.
The first step is obtaining your credit report. You will want to check this for any innaccuracies or errors, that are negatively affecting your credit score. If you find any inaccuracies or errors, you will need to dispute those through the 3 credit bureaus.
The major factors on your credit report that increase your score are
- Always paying your bills on time
- Length of time your accounts have been open
- Low number of inquiries (credit being pulled)
- Low ratios of debt to credit limit (According to Fair Isaac 30% of your credit score is based on debt)
- One major installment loan (i.e. Auto payment, 2nd mortgage)
The above factors show that you are credit worthy and will greatly increase your credit scores. If you are working on rebuilding your credit, the first thing you will want to do is apply for a credit card. For those who need to rebuild I recommend orchard bank and the imagine gold card. These are two unsecured credit cards that most people with bad credit can get approved for. This will be the first start to rebuilding your credit scores.
You will want to try and get an auto loan or another major installment loan, and make timely payments on these. Over time you will see a nice increase in your score as you make payments towards the loan.
As a rule of thumb here is the breakdown of how your credit score is determined.
– 40% Payment History
– 30% Amount of Debt (As compared to your limits)
– 20% Length of Credit (How many years of established credit you have)
– 10% New Credit (Opening new accounts within first 30-90 days)
Get a free copy of your 3 in 1 credit report with score here