As we all know your credit score is really important and worth protecting, but what is it? How is it calculated? And what can you do to ensure that it's protected.
What is in you credit rating report? Some credit reports are long and others are short. The reports include the information that your rating is based on, followed by the debts you currently have. The report will outline your debts from the past ten years and will definitely outline anything you're defaulted on. Defaulting on a payment will ruin your rating and borrowing a lot of money at once will make you look untrustworthy. People that live with you, like your partner, may affect your credit rating.
Here are a lot of things that will affect your credit score:
Amount of outstanding debt. How much do you owe? How many credit cards do you have? How close are they to being maxed out? About a third of your credit score is based on this factor.
The length of time you've had credit. Longer is better, because it will cause your payment history to be more accurate and predictable. If you've had a credit card for many years, and do not use it, keep it. It will improve this factor. Of course, if they're charging you an annual fee, you might want to try to negotiate with them about that.
Inclusions on your credit rating:
Your payment history: If you have paid your debts late, especially if it is recently. This is the section that your bankruptcies and any dealings with collections agencies will be included on. A third of your credit rating is based on this material.
Types of credit: credit reporters understand that you may have a range of loans and credit requests. So for example most agencies would not have a problem extending you a line of credit if you have a $ 250,000 mortgage as opposed to $ 60,000 in credit card debt.
Number of inquiries made in the last year: every time you apply for credit a note is made on your report, the more notes the worse you look. The number of inquiries you have had accounts for about 10% of your score.
It's really important to take your credit rating into account when you make your financial decisions. It is also important to take care of your credit rating, because at some point in the future you might need it.