The Real Story Behind Every Credit Score

Did you ever receive a letter from your credit agency showing your credit score and the question running through your mind is how this happened? Well, that is the typical scenario a credit holder experiences when they see how low their scores got. Don’t you just hate that to happen to you all the time? After reading this article, you will never have to suffer from that again.

First thing to know is that your present credit score is based on your past payments which comprise 35% of your overall credit score. If you have been paying religiously, then there is no room for asking questions. But if you missed a couple or more due dates, then this could mean bad news for you. Although creditors have different standards on when they will account a late payment, it is still advisable to pay on time. Second, the 10% of your score comes from your variety of credit. This means having different categories such as car loan, house rents or simple credit cards show your capability to handle an array of credit options as long as you remember when to pay all of them of course. Third, 15 % of your credit score is based on how long you have a history of credits. The better you have handled them over the years would determine good score. Fourth, 30% comes from the total amount you owe. It is weighed parallel to your income. So make sure to make your debt lower than your income so as to keep you scores floating. And last but not the least, 10% of the credit score you owe from inquiries regarding your credit. This could mean an overdue or a forgotten due date which is totally not for the best.

The root of this mysterious credit score is the credit holder’s lost of control and lack of knowledge. As much as you want to put all the blame to the credit agency not informing you ahead, you have to accept the fact that you are responsible for the kind of position you are currently on. You can now do the calculating all by yourself. With all these explained in simple terms, ignorance of the policies is no longer an excuse.

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