In today’s financial market, it is imperative that you have control of your credit score. So many things are based on a strong credit score that managing your score becomes something you have add to your to-do list. Your score can affect the cost of borrowing money, for business and personal use, as well as whether you get a job in certain fields. Fiscal responsibility is important in many aspects that it will follow you for years.
Here are some things you need to know about your credit score so you can manage it properly.
5 Things You Should Know About Your Credit Score
- There are 3 major credit bureaus where lenders will check your credit score: Experian, TransUnion and Equifax. Your score will vary between each of those bureaus because each one uses a different scoring system.
- Two different scoring scales are used: FICO and/or VantageScore. All FICO scores are between 300-850 and all VantageScore scores are between 501-990 and they use corresponding letter grades A-F.
- You can request a free credit report from each of the 3 main bureaus once a year. If you want it more often than that, you’ll have to pay a fee to obtain it. If you notice any discrepancies on your report, you’ll want to resolve them immediately and not let them fester.
- Your score is based on 5 main factors:
- Average credit age – Is it new debt or older debt? Do you have a lot of new debt?
- Your payment history – Late payments, repossessions, loan defaults?
- Account mix – Is it only credit cards or do you also have mortgages, car loans, personal loans?
- Credit utilization – How well do you manage the credit? Are you maxed out with no more room?
- How often you apply for credit.
- Your overall debt is also taken into consideration.
- Your report is constantly changing as payments on debt are made, as credit requests are issued, as your debt or assets change and so forth. It might say something one month and the very next month look totally different.
Make it a habit to check your reports often for changes and inconsistencies that need to be addressed. Also work on your credit utilization and keep your cards at no more that 20-30% of maximum. Watch late payments and only apply for credit if absolutely necessary. Make sure you have some mixture in your accounts too.
Knowing everything that goes into your credit score will help you manage it better and that will allow you to use your credit in the manner that will best suit your needs.