Our credit score is a numerical value assigned to our credit report to signify to lenders what type of repayment risk we pose to them when we are requesting credit. Approval or denial is all dependent on what are credit reports show as far as payment history.
A very detailed formula is used to create your score that calculates factors such as repayment record, age of positive accounts, balances on charge card accounts, past judgments or collections, and the number of credit inquiries listed on your report.
Depending on the information provided on your report, your score can range from between 350 and 900. 680 or higher is considered a good score, over 720 is ideal. Your score is very important - however the accounts that make up your credit report are a deciding factor for large purchases - such as a home!
Having only a few accounts that are in positive standing may give you a good credit score, however to make your credit report solid you need to keep on top of creating a solid history completely. Time builds strength - the longer your accounts are paid on time - the stronger they weigh on your score!
WHAT DO YOU NEED TO CREATE A SMOKIN HOT CREDIT SCORE? . . .
- Approximately 3 - 6 open revolving credit accounts (credit cards). (Of course debt to income ratio is important, so NEVER over extend yourself. Having balances owed on each of them is not a requirement.)
- Keeping credit cards with balances below 35% of the maximum allowed limit. (It must make sense on paper that you can afford all of the items on your credit report when compared with your pay stub.)
- All accounts reporting being paid on time. (Payments of 30 days late or more are reported to the credit bureaus.)
- 1- 2 loans from a bank. (Student loan, vehicle loan, home loan for example.)
- As few credit inquiries as possible. (Applying for credit can lower your score up to 5 points per pop! Never apply without checking out the details of the card you are applying for - reading all of the info takes a few minutes at most.)
- Credit accounts are stronger the longer you have them. Avoid closing long standing credit card accounts.
Using our credit guide to set up your credit? (When you fill out your worksheets from the booklet - there are various sheets that are helpful to line up exactly what you need to do in each area of your credit profile.)
***If you do not have your credit report and score in front of you yet, what are you waiting for?
Instant access to your credit report and score is available here!