What Does My Credit Score Mean?
There has been a lot of buzz going around about free credit scores lately because of the Fair Credit Reporting Act. The average person now has a right to access their credit report and score once a year for free. But companies have been using credit scores for years to determine whether or not you're eligible for a loan, a credit card and many other items of interest. Your free credit score, is a number based on research data and statistical analysis that helps creditors decide if you can pay a home mortgage loan back or if you can handle having a credit card. The credit score is based on your credit report, which is a document that details all of your previous encounters with credit. Things included are: your ability to pay bills on time and the accounts you have and how long you've had them. This information is then compared with information gathered about other people who have a similar credit history and given a sort of ranking. Each aspect of your credit report that indicates you are a good candidate for a loan or other item earns you points. Basically, the more points you have, the better and the more likely you are to pay back a debt. Once your credit report is analyzed, a free credit score is calculated and aids in the creditor's decision in your "creditworthiness." This free credit score point system is used to treat all applicants fairly without individual biases and face value judgements. Not happy with your current free credit score? There are many things you can do to improve it. Make sure you pay all of your bills on time, every time. Even one missed payment can make a bad mark of the credit report. Pay off existing balances. Don't let your credit card balance to get out of control, and always pay more than the minimum payment. Although it may take several years for a bad credit score to turn around, start today on the good credit path. It is your first step toward owning a home. Companies that give loans use your free credit score to determine your eligibility, so it is crucial that you have a good one. Anything above a 700 is considered great, so check out your free credit score and see if you're in the clear or need a little work in the credit department. Regardless of your credit score, however, just take advantage of the opportunity to see what companies see about your credit history. It only takes a few minutes to review your credit report, and it can be vital to your credit health.