Awareness What Shapes Your Credit Score
It is important that you understand what comprises your credit score and how different things can change your score. You are entitled to get your credit score, for free, each year and it is good to constantly keep track of your score and your credit report. The most basic explanation of your score is that it is a reflection of you previous loan or credit payments which in turn classifies you as reliable or a risk when applying for further credit.
If you have a good score or one that is high then this equates into being very likely that you will meet all of your payments on time and not have problems paying off your loan.
A low credit score means you may have issues paying and there is a chance the lender could lose their money. Many things like department store credit cards and other forms of instant credit are based strictly on your three digit score.
35 percent of the score is based on your previous payment history, 30 percent is based on the amount of outstanding debt that you have, 15 percent of the score is based on how long you have had credit, 10 percent is based on any new credit you might have and another 10 percent is based on the different types of credit that you have.
The two largest factors that go into your score is your previous payment history and how much outstanding debt that you have. Next is the amount of time you have had credit and the smallest sections include any new credit you have recently acquired and the different types of credit that you have.
If you have a low score then it is possible to improve your score. Every time your credit report is calculated your score can change. The first thing you need to do is make sure your report doesn’t have any errors.
It also is important that you show you have a long history of credit so keep that first credit card even if you no longer use it.
Article source:First home buyer