Why it is Important to Know Your Credit Score

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Why it is Important to Know Your Credit Score

Your credit score is important to your financial freedom. It can also affect the rate of interest paid on a mortgage when buying a home and automobile, and can effect the type of job you will qualify for. That’s right many employers check your rating and if your score is poor, they may consider you a poor risk. The same goes for insurance companies.
Your credit score or risk score, is calculated by your proven ability to repay any loan on time, the amount of credit you are carrying, how long you have been paying on these loans,
The amount of new loans you have taken out, and whether you have paid your payments on time. Having a bankruptcy or accounts that are in collection also have a very negative effect on your score.
This risk score ranges from around 200 on the low end and 900 on the high end. A credit score of 800 plus is considered a very good score.
Other factors that will affect your credit score are your level of education (those with college degrees fare much better when it comes to scoring). The number of years you have lived at the same location, and how long you have been with the same employer can also affect your credit score. If you are a home owner you will be granted additional points. They are looking for stability here, and the ability to pay your bills on time.
It is a good idea to make sure your payments are made on time. You should also keep the balance on college student credit cards down. Do not open many new accounts and try to keep everything paid up–to– date. This will greatly improve your risk score.
If you are having a hard time paying your bills on time, you may want to consider talking to a debt counselor. Be cautious when dealing with debt counselors, some of them are not legitimate. Make sure you take advantage of the fact that you are able to obtain a free yearly credit report and keep track of all of your outstanding loans. When you get your report, go over it to see if there are any mistakes or charges you did not make. These items can be questioned and if proven that they were not made by you, they will be removed from your report.

Student credit cards.com @ May 19, 2008