How to Get Credit Score
We depend on our credit score for some of the most important things in life – purchasing our first car, investing in a new house, getting us through school. Yes, they may just be three digit numbers, but these numbers can have a drastic impact on our present and on our futures. But what exactly is a credit score, how is it calculated, and how can you find yours? Let’s find out!
So, what exactly is a credit score? A credit score, as mentioned previously, is a three digit number (usually ranging between 300 and 850) that tells loan lenders how reliable and trustworthy you are when it comes to paying your bills. A high credit score suggests that an individual pays their bills and pays them on time. A low credit score, on the other hand, suggests that an individual is not reliable when it comes to paying bills on time (or at all!). Obviously, the goal is to achieve a high credit score. The higher your credit score, the more likely you are to be accepted for loans that you may need for buying a house, attending school, purchasing a car, or for anything else you may need a loan for.
How is your credit score calculated? Although there are several different ways of calculating a credit score, the majority of lenders use the FICO method. Within this method, information is taken from your credit report, weighed, and calculated. While all credit reports are calculated somewhat differently, we can determine an approximate breakdown of its calculations.
Approximately 35% of your credit score will be based upon your loan payment history. This section factors in how regularly you pay your bills, how many of your bills have been paid on time, and how many times you have had a debt reach a collection agency. Another 30% of your credit score is based on how much debt you currently owe. The more debt you have, the lower your credit score will be. An additional 15% of your credit score is based on how long you have had credit. The longer you have had credit, the higher your score will be. Yet another 10% is based on new credit. If you have recently opened a credit account, this could have a negative impact on your score. The final 10% of your credit report is based on the types of credit that you owe. Having many different types of credit will have a positive effect on your score.
So, where can you get your credit score? There are several places that a credit score can be obtained. The first, and most recommended, is a credit bureau. While they may take a few weeks to deliver the results, a credit bureau is a safe and secure way to acquire your credit report and score. Another option is to purchase your credit score online. There are many online websites that work with credit bureaus to provide you with an accurate credit report. Finally, you could obtain your score using less traditional methods. If, for example, you have been denied a loan based on your score, you can request for a credit report. Those requiring government assistance and those who are unemployed and seeking a job can also obtain a free credit report.
Knowing your credit score is very important. It is generally suggested that you check your credit score at least once a year so that you know whether you need to improve it and whether or not you could be approved for any future loans. Search for your credit report today and take charge of your financial future!