In today’s credit squeeze the importance of good credit cannot be emphasized enough. As a consumer, knowing how good or bad your credit score is necessary to keep a finger on the pulse of your personal finances. The Fair Isaac Corporation (FICO) sets the standard for credit rating and uses various criteria to determine a credit score. What exactly is a credit report?
Your credit report is basically the history of your credit dealings. The credit report reveals the credit cards you have, whether you have loans and what type of loans (home loans, student loans, car loans), the time period over which the loans were taken, and your liabilities towards repaying those loans. The credit report would include your credit card debt, as well as all other debts you have run up like domestic electricity, telephone bills or medical bills.
The credit report uses this data to compile your credit score from a computed program. The computer calculates the time you take to pay your bills, how much debt you have, your credit history, mortgages, and declarations of bankruptcy. A typical score would be a three-digit number, ranging from 500-800; the higher the number, the better your credit score will be. Importance is given to factors such as payment history, amount of money owed, length of credit history, new credit and type of credit used.
A lot rides on your history of payments; how regular you are with them, how many debtors you have and the amount of consolidated debt burden you have as an individual. Your credit rating and scores will suffer if you are a habitual defaulter on your loans and will improve if you work at paying off what you owe.
In a nutshell, it is wise to check credit scores; the higher your credit score is the less money you pay in interest; and the lower your credit score is the higher your rate of interest will be. Visit http://www.5minuteautoloan.com/ to know more about credit score.