A credit score is a numerical expression of a person’s creditworthiness which is calculated by analyzing that person’s previous credit history. This three digit score is controls the only way to decide whether or not you are eligible to receive a credit, and if yes then under what terms and conditions. Credit score acceptability can be found in many countries around the world. In US, credit score is also termed as FICO (Fair Issac Corporation) score. Three major US credit bureaus namely Equifax, Experian and TransUnion gathers information regarding consumer usage of credit. Failure to understand the impact of this credit score on your future life can land you among the trouble of instable purchasing power and a poor lifeslyle.Your credit score is broken down into five categories:
• Payment history- 35%
• Total amount owed- 30%
• Length of credit history- 15%
• New credit- 10%
• Type of credit in use-10%
Following are some of the measures by following which you can improve your credit scores.
1. You can improve your credit score mostly by making your payments on time. This is the single most important factor that is considered while drafting your credit history. Payments that are due over 30 days or more will show up in your credit report and negatively mark your credit score and these negative marks generally stays on your credit report for seven years.
2. You have to keep your total debt load under your control in order to lowering down the total balance you owe. This is the second largest factor which affects your credit score. Currently if you are having a significant amount of outstanding debts then you motto should be to stop borrowing and work towards lowering down the existing balance.
3. Keep your old accounts in good standing open position as the length of your credit history is another important factor.
4. Though new credit is a least significant factor in your score, it is still an issue to discuss. Do you go for a shopping frequently? Because probably you would not like to get this fact on your credit report that you are in constant need of credit. You also don’t want to open a credit account that you are not going to use. You may get that additional 10% discount when you open that new retail store card, but that little amount money that you save may be significant where multiple new accounts such as these can hamper your credit score.
