A credit score is a number that represents a person's creditworthiness. Creditors and lenders look at this number to determine the terms with which they want to use before doing business with applicants. Typically a person with a high credit score will garner favorable lending or financing terms, usually in the form of lower interest rates. Low scores may bring more challenging terms for applicants.
The most popular scoring model used today is the FICO scoring model. FICO credit scores can be calculated from the files found at two credit reporting agencies. These are Equifax and TransUnion. Scores range from 300 to 850. The closer one gets to 850, the easier it should be to get credit.
There are many factors that can influence this very important number. To maintain a good score, consumers should try their best to demonstrate responsible credit management. A good credit score will be reflected by good credit history. This doesn't always mean paying off statements in full. It can also mean paying the amount that is owed at the specified and agreed upon time.
There are many pitfalls that consumers find themselves in when it comes to credit card usage. Consumers should avoid these scenarios to prevent detrimental marks added to their scores.
• Late and unpaid balances - shows poor responsibility and financial management
• High balances - a potential sign of financial stress
• Too many cards - adds hard inquiries with each application, over-extension of credit
• Closing old cards - loss of credit history and increases balance/limit (debt/credit) ratio
Josh offers tips on how to better manage one's credit and finances. One place to start would be to understand your credit report and score. For more credit related articles, please visit http://www.CreditReportCamp.com
Article Source: http://EzineArticles.com/?expert=Josh_D_Paul
The most popular scoring model used today is the FICO scoring model. FICO credit scores can be calculated from the files found at two credit reporting agencies. These are Equifax and TransUnion. Scores range from 300 to 850. The closer one gets to 850, the easier it should be to get credit.
There are many factors that can influence this very important number. To maintain a good score, consumers should try their best to demonstrate responsible credit management. A good credit score will be reflected by good credit history. This doesn't always mean paying off statements in full. It can also mean paying the amount that is owed at the specified and agreed upon time.
There are many pitfalls that consumers find themselves in when it comes to credit card usage. Consumers should avoid these scenarios to prevent detrimental marks added to their scores.
• Late and unpaid balances - shows poor responsibility and financial management
• High balances - a potential sign of financial stress
• Too many cards - adds hard inquiries with each application, over-extension of credit
• Closing old cards - loss of credit history and increases balance/limit (debt/credit) ratio
Josh offers tips on how to better manage one's credit and finances. One place to start would be to understand your credit report and score. For more credit related articles, please visit http://www.CreditReportCamp.com
Article Source: http://EzineArticles.com/?expert=Josh_D_Paul
