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Things to know about your credit score

By George Hauser
Published: Wednesday, October 20th, 2010

We often hear of credit score but not all of us are really serious in knowing what it could do to us. The credit score is a measuring system that tells a lot on how we handle our finances when it comes to using our credit cards, loans and repaying them. With the credit score, a lender determines a borrower’s creditworthiness. When you have a good credit score then you can enjoy easy approval on loans or credit card applications while having a poor one will deprive you of taking loans and cards. While there are lenders who actually approves a borrower with a poor credit score, the borrower will have to suffer the consequences of paying for high rates; way higher than the average.

The Credit bureaus have different ways of providing scores to consumers so what may be acceptable to other bureaus may not be for others. If you want to have a good credit score, here are some of the factors that you have to be very mindful of:

Your delinquencies:

All the late payments that you made in the past are reflected in your credit report and bring negative impact on the credit score. If you have had past dues, the lenders would think that you can always do it again and again. So this is all about the lender’s impression on you. Even if you are making on-time payments now, you already have a record of being a delinquent. Make it a habit then to make your payments on time. So for you not to forget your due date, keeps a close tracking on it. You can write reminders on places you can easily read them.

Your credit history:

People with a long and impressive history are seen by lenders to be a good subject. When you have been using your credit card for the longest time now and were able to keep in good standing, then you’re on your way to a better credit score. While this is not the primary factor, it does a lot to the score. Don’t be tempted to cut off old credit cards. Instead of disposing them, just use them with small purchases to keep its activity.

Your credit use:

A person is seen as a credit risk when he uses the card near its credit limit. Of course credit card companies prefer those who use their credit card in moderation than those who max their cards out. As recommended, use just thirty percent of your total credit limit. If you wish to keep a card in good standing and improving your score at the same time then follow this simple rule.

Your credit inquiries:

The more credit inquiries you make, the more damage it could cause your credit score. When you make a lot of inquiries, the credit bureaus will have an impression that you need money and are under financial stress. As much as possible, refrain from making unnecessary inquiries for a simple hit brings a negative effect on your credit score.

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