What Is Your Credit Score?

A credit score is a number, usually between 350 and 850 that is based on your credit history and your credit report. Your credit score is an easy way for lenders to tell what sort of risk you are for financing and credit options. Those with low scores are usually seen as poor risks and are offered either high interest rates or are refused credit. Those with high scores generally enjoy better interest rates on financing and often get more options to choose from. Every lender wants to have clients with high credit scores since these clients are more likely to pay off their debts on time. A number of things affect your credit score. If you have been reported to collection agencies or have routinely been late paying off your bills or debts, your credit score may have suffered as a result. If you have had trouble paying off bills from major companies, especially, your credit score may have plummeted. If you have declared bankruptcy, your credit score is likely very much affected. In general, the further away from an event you are in time, the less it affects your credit score. If you have not paid any bills in the past three months, for example, that may affect your credit score more than a bankruptcy ten years ago. Immediacy is important since credit information stays on your credit record - and so affects your credit score - only so long. Sometimes, mistakes and identity theft may cause your credit score to drop suddenly. To find out your credit score, you can apply to get a credit report and a credit score from a company that provides credit reports. You should go over your credit report and make sure that there are no signs of identity theft - signs of non-payments that are clearly not yours - and mistakes and inaccuracies that affect your credit score. Correcting any such mistakes can immediately increase your credit score. If a low credit score is caused by your financial past and not mistakes, you can still get your credit score to rise dramatically by starting to pay off your debts and by making your bill payments on time. The longer you can go without missing payments, the better your credit score looks. If you are in financial trouble, talking to your creditors or to a financial counselor can help you find a strategy for keeping your credit score afloat. Some people choose to take out small secured loans and repay them right back in order to quickly improve their credit score.

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