Know How Credit Score Calculation Is Made

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What Is Credit Score And How To Get Your Score Free

 In United States credit score has a lot of value. We can call it as your life line as it determines the results of many of your activities like getting a gas connection, credit card and loans etc.

 A credit score is a three digit number from 300 to 850. This number tells your credit worthiness and it portrays a calculation of whether you will promptly pay your bills or not. If your credit score is high, the creditors are more assured that you will pay your bills or loans.

 There are many credit score models, but the best model is of Fair Isaac Corporation (FICO). You can request FICO to furnish your credit report. They have developed a unique formula to calculate your credit score. FICO's model is widely used by the banking sectors and credit related industries.

 As in United States and some other countries, your credit score is everything, you should take care to get high credit score. Ignoring its importance will land you in difficult terrain, as you will find it difficult to get a phone connection and cable or gas line. A bad credit score will affect your job prospects also.

 You need credit for many purposes. You can't manage everything from your savings. You need credit to buy a home, purchase consumer durables and starting a business. A low or bad credit score affects your chance of getting a business loan. Sometimes you will be sanctioned a loan with higher interest, which will be a great burden on you. It applies to credit cards as well. A high score will get you a best credit card deal with a lot of features and also low interest rates for your purchase. The credit card companies and banks will scrutinize your credit report before issuing a credit card.

With low credit score your task will be a Herculean one, if you apply for bigger loans such car loan and mortgage loan. In United States your credit score is your life line. The immigrants who are looking to settle at USA should always keep this in mind. Knowing your credit score is more important before applying for a loan.

• Punctuality Determines 35% of your score - Paying your bill or installments on time or before due date, will give you a higher credit score.

• Percentage of use determines 30% - A ratio is arrived between the current revolving debts and total available revolving credit. Suppose you don't use your credit card to the fullest limit, you will get a higher credit score.

• Credit history - Your length of credit history amounts to 15% of the credit score calculation.

• Credit card types used - 10% is given to the type of credit cards used.

• Recently obtained credit - 10% is given to the recently availed credits.

 Carefully build your credit score, as it will help you to get the loans and credits when you need most. Many are surprised and are clueless when their application for credit card or loan is declined. This is because they don't know their credit score. You can get your credit score from FICO by requesting or other credit reporting agencies. If there is any error, you can request to fix it to get a higher credit score.

Build a higher credit score over the period, if your present score is low or bad. Prompt payment of bills and proper using of your present credit limits will help you to build a higher credit score over the period and make your life happy.

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