Credit Score: What Is It and How to Get Yours For Free
In the United States, your credit score is everything. It is something
that you should take care of or if you don’t, getting a phone, cable or
gas line hooked up in your home can be difficult to d o. There are also
certain companies that take a look at your credit score first before they
even hire you. Even if you are qualified to do the job, a low credit
score can ruin it all for you.
Your credit score is also analyzed by creditors, such as banks and credit
card companies. Just try to imagine that you need to get a loan to start
your own business, with a low or bad credit score, you have a lesser
chance of getting that loan approved or you may get it approved but with
high interest rates. The same thing goes when you apply for a credit
card. Credit card companies or banks that issue credit cards will first
take a look at your credit score before they can get your application
approved. A high credit score means that you have a greater chance of
getting the best credit card deals with a lot of features and also with
low interest rates for your every purchase using a certain credit card.
Even if you are applying for a mortgage, a car loan and other kinds of
loans, your credit score will play a very important role in it. This is
why it is very important for you to have a high credit score and maintain
it that way or increase it.
First of all, you have to understand what a credit score actually is. A
credit score will represent a three digit number from 300 to 850. This
number will represent a calculation of the likelihood of whether you will
pay their bills or not. This means that if you have a high credit score,
creditors will be sure that you will pay your bills or your loan.
In the United States, FICO or Fair Isaac Corporation is the best-known
credit score model in the country. They calculate your credit score using
a formula developed by FICO. The system is used primarily by credit
industries and consumer banking industries all across the co untry.
Credit scores are calculated in the following factors:
• Punctuality of payments – This will be 35% of the calculation. If
you pay your bills on time or before the due date, your credit score will
tend to be higher.
• Capacity used – This will amount to 30% of the calculation of your
credit score. It will contain a ration between the current revolving
debts to total available revolving credit. If you use your credit card
and if you don’t use its entire credit limit, you will get a higher
• Length of credit history – This will amount to 15% of the
calculation of your credit score.
• Types of credit used – This can affect 10% of your total credit
• Recent search for credit or the amount of credit obtained recently
– This will amount to 10% of the total calculation of your credit score.
Surprisingly, not many people know their credit score and often end up
wondering why they got denied for their loan or credit card application.
You can easily obtain a copy of your credit report by requesting for it
from FICO or from the credit reporting agencies. They will be able to
provide you with a free calculation of your credit score every year. It
is also a great way to find out if there are any errors in your credit
report that may be causing you to have a low credit score. You can
request it to be fixed in order to let you have a higher credit score
Always remember that your credit score is an important factor of your
life. Keep it high and you will get better deals on loans, and credit