Credit Scores - Affecting Your Credibility

Today, we buy mostly everything on credit. We need credit, especially, to buy a house or a car. When applying for a loan, our good credit scores help us get it at reasonable interest rates. In fact, from landlords, to insurance companies, to utilities, everyone looks at your credit scores, as they are a reflection of your financial health. A healthy credit score goes to determine what various people will charge you for their services. Today, even employers check your personal credit scores before offering you a job. A good credit score further helps you in getting additional credit. You would need to undertake credit repair if your credit score falls below a particular level.

Before we get an understanding of the factors affecting your credit scores, let us understand who maintains your credit reports and how they do it.

The Credit Bureaus
Three major credit bureaus - Equifax, Experian, and TransUnion - calculate your credit scores. Though they use the same methods and formula to calculate your scores, they sometimes come up with a different rating. This could be because of various reasons. One agency may have more updated information about you. A creditor may have shared information about you with one agency only, but not with the others. Creditors, while checking on your scores, take the average of the three scores from these three agencies.

Your credit scores range between 350 and 850. A score of 680 and above is excellent for obtaining mortgage financing at low interest rates. A credit score of 621 to 679 is an average score and you would have to pay a slightly higher rate of interest. A credit score of below 600 makes you potentially unreliable and very difficult for you to obtain credit of any kind. If your credit score falls below 600, you need to undertake steps to repair your credit on an immediate basis.

Factors that Affect Your Credit Scores

There are several factors that could negatively affect your credit scores. There are ways to prevent these factors from affecting your scores.

*Check on your history of making debt payments and the amount of debt you presently carry.
*The length of your credit history is another factor. The longer your good credit history, the better it is for you.
*Do not close old or paid off accounts. These show the length of your credit history and contribute to higher credit scores.
*Paying off your debts is a good way to improve your credit scores.
*Make your payments on time. Delayed payments appear on your credit reports and adversely affect it.
*Your race, sex, age, level of education, or marital status has no bearing on your credit scores and neither does the fact that your application for credit has been turned down.

Take care to maintain a high credit rating and get credit and loans at good rates. You have the option to undertake credit repair to improve your credit score but maintaining a healthy credit rating is a better option because prevention is always better than cure.