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Get to know the criteria on which your credit score is based on

By George Hauser
Published: Thursday, September 10th, 2009

It helps to know what makes up your credit score. The credit score will help you get the loan, the insurance and even the job you like. This is because lenders, insurance providers and some employers will use this three digit number as the basis of your ability to pay debts and credit.

The credit score is produced using a software that mathematically transforms the information on your credit report. Simply said, the cleaner your report is, the higher your score will be. And with a high score, you can face lesser troubles getting the loan, applying for a credit card, getting insured and landing a job.

There are primarily five things in your credit report that determines your credit score. These include your credit history, how well you pay your credits, the length of time you’ve been using your accounts, the types of credits you have, and the number of recent loans you’ve made. Therefore, if you want to raise your credit score, one logical credit score advice is to focus on these things and nothing else.

Some people have the tendency to over think about their credit report. Perhaps because of the lack of knowledge on what makes up their credit score that they overlook the actions they should really be taking to improve their standing. Credit is an important matter, a credit score advice you should follow is not lose track of the real things that matter to your credit score.

There are laws that prevent credit score to be calculated based on your race, color, nationality, gender and marital status. If you get very low credit score, don’t think that the credit score generator has something against the previously mentioned facts. Similarly, credit score also does not get affected by whether you receive public assistance or have exercised your rights under some laws on credit previously.

The most common credit score producer is FICO. This company does not use the following data to calculate your credit score: age and where you live, salary, employer and other employment information. If you want to improve your credit score, one credit score advice is to stop meddling on your bank records and pay more attention on paying your credits on time. FICO doesn’t consider how much money you have in the bank.

In addition to this, another credit score advice is to check on your own credit report and study what is says. Don’t worry because such credit inquiry does not belong to the other kind of credit inquiries that affect your score. Find out what needs to be improved and start changing your course of actions.

Don’t also think that because you are one of the many people who are undergoing some form of credit counseling, you have it more difficult or easier on credit scores. FICO only relies on the information contained in your credit report.

Although it is one of the leading calculators of credit scores used by lenders, do keep in mind that there are banks that have their own way of credit scoring. The aforementioned information could be used by these banks. One good credit score advice is to ask what criteria they use to approve applications. Just so you would have an idea about how you are graded.

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