Knowing a credit score is important if you are going to apply for a loan or if you want to improve it. Still, the check-out process is more complicated than it seems on the surface. An outstanding three-digit number is crucial if you want to get mortgage or car loan. Obviously, you might not care about it of you are searching for no credit check loan for unemployed. Otherwise, it’s a compulsory thing but how to do it? Learn it from the tips of the real financial experts.
Credit Score: Definition
Everyone, who deals with credits, knows what credit score is. In fact, it’s the most powerful proof of your creditworthiness that contains your path as a borrower. The most wide-spread credit score system is FICO system, which covers numbers 300 as the worst and 850 as the best. The potential clients with 700 and higher points are more likely to be approved. The three-digit number is actually all you need to provide to your potential lender to convince him of your ability to pay off the debt.
Credit Report: Definition
A credit score is presented in the credit report that is created by the three major financial bureaus – Equifax, TransUnion, and Experian. The representatives of these parties gather the appropriate information about your personality, credit accounts, data from the financial agencies you cooperate with, and information about everyone, who has asked to show the credit score during recent 2 years.
Credit Score: Peculiarities
There 5 components that make up this magic three-digit number. Payment history composes 35% of your credit score. Therefore, keep the track of your payments and forget about delays! Debt-to-credit ratio is the second component that comprises 30% of the impact on your credit score. In simple words, it’s the proportion of the amount of money you have to the available credit. The lower this number is, the better it’s for your credit score.
Credit history information includes 15% of the overall influence on your cherished number. It shows the way you dealt with money and simply the length of your credit history. Your recent credits can influence your credit score 10%. The more loans you have got recently, the fewer points you achieve. All the types of loans that you have (including credit cards) makes up 10% of the impact on your credit score.
Credit Score: Being Cautious
Don’t forget that every new financial operation can have an impact on your credit score. Therefore, if you are going to apply for a desirable loan, don’t apply for credits during several months, pay off the debts on time, and follow the directions of your lenders.
How Often Should I Check Credit Score?
The most reasonable variant would be to check out your credit score once a year. Remember that the more often you apply for a credit report, the more points you will lose. Some experts announce that by checking the number more than three times a year, a client can lose from 5 to 15 points! Therefore, remain cautious and succeed in the credit process!