Understand Your Credit Score and Have More Control Over Your Credit

Do you have an idea of your credit score? With the tougher economic times, it is becoming tougher to obtain a loan for a home or car. Stores are no longer handing out credit cards like a grandmother who hands out candy. More and more people today are taking their credit scores more seriously.

The easiest way to obtain your score is to contact one of the three main credit agencies. (Experian, TransUnion, or Equifax) The Equal Credit Opportunity Act allows for each individual in the U.S. to receive a free copy of their credit report from each of the three credit agencies. The Act also states that your allowed to receive your credit score. The score is not free but can easily be purchased for around $7.

This article will provide information on how your credit score is obtained. You may also want to use this information to calculate on your own approximately what your score may be.

I wil start off by addressing those of you who are just starting out and don't have any credit at all. If this is the case you may find it a bit challenging to obtain credit in the beginning. It can often be as hard to obtain a loan with no credit as it is with poor credit. If this is true in your situation, you may want to read the following article for tips on establishing credit when you have none.

http://www.associatedcontent.com/article/84603/how_to_get_credit_when_you_have_no.html?cat=3

Okay, for the rest of you... you can expect that your credit history is the most important aspect that the credit agencies use in determining what your credit score is. Approximately 35% of your score is going to based on your credit history. The debt you have have had the past 7-10 years. Even if these past debts have been paid off they are allowed by law to remain on your credit report for up to 10 years. Your credit score will be based apon any collections you have had in the past, judgements, tax liens, collections and past due accounts which did not actually go into collections but ended up on your report.As you can see, the financial decisions you make today greatly affect your future. It is very important to be cautious with any financial contract you may be considering.

30% of your score is based on what your current financial status looks like. What are your current debts? How much do you owe? What is your debt ratio ? ( The comparison of your credit limit vs. your debt ). How many open accounts do you have? Have your recently closed any accounts? Have you opened any accounts recently? How many credit inquiries do you have? Be warned...everytime someone looks at your credit report on your request, the inquiry will be listed on your report for an average of 2 years.

The remaining 15% is based on how stable you are percieved to be. This is based on how long your credit history (how many years the credit agencies have been aware of you...the longer the better), how many years you have been employed with the same company and how long you have been at your current address.

It is important to consider wisely any decision you make regarding your finances and how it may affect your credit score. It would be a good idea you receive a copy of your credit report at least annually. (It is free!) This way you will be able to review your information and make certain that there are no errors on your report which may be affect your credit score and will also to help you in making better decisions because you will know exactly where your credit stands.

SOURCES:

http://www.experian.com

http://www.transunion.com

http://www.equifax.com