Your credit score is a number usually between 350 and 850 designed to help lenders predict the likelihood you will repay future debt obligations based on the performance of previous and current loans. It is a complicated but vital aspect of your financial health and the mechanism whereby lenders will decide whether to approve your credit application and the terms it will carry like a down payment, interest rate, and how long they will allow you to take to repay the loan.
Credit scores are also used to determine auto and homeowner insurance premiums, job applications, rental applications, and utility deposits, directly affecting nearly every aspect of your financial life. However, most people rarely reach an “Excellent” credit rating, typically above 750.
Improving your credit score can save you a great deal of money over time and prevent unnecessary financial stress. To improve your score effectively and maintain a positive credit rating, it is necessary to know how to calculate that score.
Fair Isaac is the corporation that created the FICO® score. While they don’t reveal the exact scoring model, there are several factors that will affect your score. This weight of factors is how your FICO® score is calculated and then reported to the three nationwide credit reporting agencies.
The factors and the percentage of weight they carry, which is used to determine your score, are: payment history (35 percent), amount owed (30 percent), length of credit history (15 percent), new credit (10 percent) and type of credit used (10 percent). All of these factors are evaluated to determine your final FICO score.
Other considerations include negative credit history items, like previous bankruptcies, collections or delinquencies, and any upticks in hard inquiries over a short period of time.
The three nationwide credit reporting agencies, Equifax, Experian and TransUnion, receive monthly updates from creditors and lenders. These reports contain the most recent information about your payment history, current balance and other details that impact your credit accounts.
These credit reports are analyzed by lenders and credit card companies when you apply for new credit. Based on the information contained in your credit bureau reports and your current credit score, lenders will assess whether or not to approve your credit application and what the terms of the loan will be.
Individuals with FICO® scores lower than 650 tend to get stuck with higher interest rates, while individuals with FICO® scores greater than 740 receive the best interest rates and lower monthly payments.
Taking steps to improve your credit score can greatly increase your chances of receiving credit approvals for credit cards, mortgages and auto loans and may lead to offers with favorable terms. One way to quickly increase your credit score is to piggyback onto someone else’s positive credit history by becoming an authorized user on their credit card.
BoostMyScore can help you become an authorized user on a credit account that has little to no balance and a longstanding positive payment history. By becoming an authorized user on a credit account with an amazing history, your credit can improve because those positive details will be reflected in your next credit report update.
Quickly boosting your score can create more opportunities for you to receive credit approvals and better interest rates. Whether you’re house hunting, thinking of buying a car or just ready to finally improve your credit score once and for all, BoostMyScore can quickly and efficiently help you achieve your financial goals.
As you’re leveraging the benefits of BoostMyScore, continue working on credit repair over time. First and foremost, you must analyze and evaluate your current credit report to understand if the information contained in it is accurate and up to date. Contact the credit reporting bureaus if you find any inaccurate or outdated information that could be negatively affecting your FICO® score.
Paying down your current balances and making on time monthly payments is another way to slowly but surely rebuild your credit and attain a higher credit score. Maintaining consistent and timely monthly payments combined with utilizing BoostMyScore is a winning formula that can lead to improvements in your financial standing and your FICO® credit score.
Your credit score contains vital information that will affect your financial well-being for the rest of your life. Educating yourself about your FICO® score and your credit report and working with BoostMyScore is an amazing way to empower yourself and improve your financial standing.
Call BoostMyScore today at 1-800-531-1472 and take the first steps on the road to improving your credit score.