How Credit Scoring Works

The all important credit score! It determines the amount of loan you can get, it determines the interest rate at which you are charged for a loan, etc. Your credit score plays an important figure in your financial life. So what goes into making that all important score of yours? How does it increase, how does it decrease and what are the factors that go into its calculation?

Your credit score is a number that reflects on the likelihood at which you will pay back a loan. Scores range from 350 (high risk) to 950 (low risk). Credit scores do not take into consideration your income, how much savings you have or demographic factors such as gender, race or nationality. Your credit score is affected by your current debt level, your past delinquencies, your credit history and how many times your credit report is pulled up by various agencies. Your score considers both positive and negative information in your credit report. For instance, recorded late payments will lower your credit score while a good track record of making payments on time will raise your credit score. Timely payment of your bills is important to ensure you maintain a good credit score. The amount of balance you have left on your credit card, how many credit card accounts you hold and your use of revolving credit also affect your credit score to a great extent.

Your credit score and credit report is formed on the basis of your credit history and you need to have at least one account which has been open or updated in the past six months to get a credit score. If you do not meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage.

All in all, if you can pay for all your debts in a timely and consistent manner and not take more debt than you can handle, your credit score shouldn't be able to trouble you in life. So take care and be wise with your finances.

Sameer S Panjwani is the CEO and Founder of ChoiceOfHomes.com - A Real Estate Portal for Home Buying, Selling and Renting. Website url: http://www.choiceofhomes.com

---

SuperCharged Secret 1 of 5 - Credit Card Utopia

I AM THE CONSUMER. AND I HAVE LOW-RATE SUPER-POWERS!Note: The... Read More

Choosing The Best Credit Card To Apply For

Always shop around to get the best deal when choosing... Read More

Fair Isaac Corporation Credit or FICO Score

As I am not from the US, I had no... Read More

Credit Repair Scam - How To Avoid Being A Statistic?

A good credit history is critically important for the consumer.... Read More

Restore Your Credit Rating And Reduce Your Debts

Your credit rating affects many areas of your life. Opening... Read More

The Next Person With Credit Problems Got Their First Credit Card Today!

One of the focus areas of my information is the... Read More

Triple AAA in 30 Days

Have you ever wonder about how to get good credit... Read More

Improving Your Credit Report

Even if you think you have a wonderful credit report,... Read More

Credit Suicide

Few things influence the home buying process more than your... Read More

How to Avoid Credit Card Late Fees

Everyone hates late fees and being late will cost you... Read More

Credit Report ? Look Out for Your Debit Report, Too

Most consumers are aware that there are companies that keep... Read More

Credit Score: The Brightest Feather In Your Financial Cap

Credit scores are the most important aspect that determines your... Read More

How To Get a Low Interest Credit Card

Consumers often have the first credit card that they ever... Read More

What You Need to Know About Interest Rates

For all people shop around for the best rate, there... Read More

What Are the Most Common Ways to Commit Identity Theft or Fraud?

It's the number one source of consumer complaints at the... Read More

Guide to Credit Terms

Listed below is a useful guide to credit card terms.... Read More

Finance - Money, Money

Finance is a big word for some of us. It's... Read More

Credit Verus Debt

Secured and unsecured debt - what's the difference?It's easy to... Read More

7 Ways To Squash Identity Theft

It is the scourge of our age: identity theft. Thieves... Read More

How You Can Avoid Becoming A Victim Of Identity Theft

To reduce or minimize the risk of becoming a victim... Read More

Applying for Credit Cards Online

In the olden days, about 10 years ago, before the... Read More

Learn The Truth About Identity Theft

Identity theft is the fastest growing crime in America, according... Read More

Choosing The Credit Card That Is Right For You

Credit cards represent an important part of our financial lives.... Read More

Annual Credit Report and Free Annual Credit Report

Getting an annual credit report review has been the advice... Read More

Credit Card Tips

Here are some useful credit card tips for you to... Read More

How To Start A Second SEPERATE Credit File!

Your personal credit file is separated from those with the... Read More

What is a Bad Credit History?

A bad credit history can sometimes seem like a curse...... Read More

Finding the Right Credit Card

There are so many credit cards out there to choose... Read More

Credit Trap: What They Dont Tell You About Credit Cards In College

In industrialized nations, going into debt starts early. It's easy... Read More

10 Ways of Reducing the Risk of Identity Theft

1- Check your credit report regularly2- Secure personal information in... Read More

Credit Cards - A Blessing or a Curse?

Owning a credit card can be quite an advantage. Whether... Read More

Bankruptcy vs. Credit Counseling: What Should I Do?

Credit Counseling and bankruptcy are both ways to relieve the... Read More

Credit Card Dirty Tricks

There are many of us that have been badly stung... Read More