Do you Understand your Credit Score?

Created: 2019-05-17 09:00:00

Taking advantage of lending opportunity is a big of modern life and you want to make sure that you have a firm handle on one of the biggest pieces of the lending puzzle – your credit score.

Your credit score is going to dictate and determine whether or not you are approved for loans and lending packages but it’s also going to determine the amount of money you can borrow, how frequently you can borrow, and a whole host of other key factors in your financial life.

It’s critical that you understand exactly what your score is, how it is created, and how it is determined so that you can make the most of your opportunities.

You don’t have a single score

A lot of people are surprised to learn that they don’t have a single credit score but instead have multiple scores – at least three and sometimes quite a few more than that.

The most traditional credit score people (and businesses/lenders) referred to is called your FICO score. All of the major credit bureaus (of which there are three) may have a different number for that score, however – depending on whether or not you’re looking at your Equifax, Experian, or TransUnion history/reports.

You can make it move up or down

When it comes to really optimizing your score you had to take full responsibility for whether it moves up or down – while maximizing the potential of increasing your score as quickly and as consistently as possible.

The payment history that you have is going to be responsible for 35% of your entire score, with another 30% made up of the amount of debt you currently have outstanding. 15% is made up of the length and lifetime of your credit history, and any new credit is going to be 10% of the score. The type of credit you have – and whether or not you have a mixture – will round out the remaining 10% of your credit scores.

Warning: Late repayments can cause you serious money problems. For help, go to moneyadviceservice.org.uk