About Your Credit Score
Once you learn the basics of your credit report and you realize the need to work on that report so that it can be the best possible, you need to take an in depth look at your credit score. Knowing everything about your credit score will help you take the right actions in order to raise your score so that you will have a better chance at getting the loans that you need.
When Does Your Credit Score Matter?
In order to understand why it is so important that you look after your credit score, you need to understand why it matters so much. In fact, there are more people now than ever that will look at your credit report, and it can affect so many things in your life. Here are some of the situations when your credit report will matter.
- When you apply for a loan, like a mortgage, a vehicle loan, or a personal loan
- When you apply for a credit card
- When you apply for store credit
- With some potential employers, when you apply and interview for a job
- When you try to secure insurance, like auto, homeowners, life, health and business insurance
- When you apply for a lease on a home or apartment
- When you apply to get a cellular phone
- When you apply for utilities, like electricity, cable, telephone, or water
As you can see, there are quite a few people who will be looking at your credit. If your score is very low, you could get turned down for many different things and not just for lending. In addition, if you have a low score, then you may have to pay extra deposits to secure things like utilities, leases, and cellular phones.
Understanding Everything about Your Credit Score
Now that you can see how important your credit score is, you need to understand the score itself, what affects it for the negative and positive, and how you can build your score up. Your credit score is a combination of everything surrounding any loans you have. Now, things like your electric bill will not normally be on the score. The only way these things would be on your credit report would be if you were delinquent in paying them. Then, this will show up as a negative mark. The things that will show up on your report will be things that you have open as lines of credit. This will include the following:
- Open credit cards (with the balance that you owe)
- Open lines of credit (like second mortgages or home equity loans)
- Auto loans
These things will show up if you have open accounts. When the accounts are paid off in good standing and closed, then they will no longer have an impact on your credit score. In fact, when you have had credit before and you pay them off without being late, this will actually have a good impact on your score because it proves you can be responsible with credit.
What Will Have a Negative Impact On Your Score?
When you are learning about your credit score, the next thing you need to know is what will lower your score. If you know the things that can lower it, then you can take action to rectify those things. Here are the marks that will lower your credit score if they show up on your report.
- Late payments. This does not just include those credit accounts. If you make a late payment on a medical bill, on a utility, and on just about anything, then you could have a negative mark on your score.
- Unpaid accounts. If you leave accounts unpaid, then they will be considered delinquent. Even if the account is closed, the delinquent account will show on your report for a longer amount of time.
- Too many accounts open. If it looks like you have overextended yourself and you have more credit than you could reasonably handle, then this will appear as negative.
- Too many high balances. If you have several credit cards maxed out and numerous other loans, then this could appear like you may not be able to keep up with payments.
- Bankruptcies. Considered the big bad of the credit score, a bankruptcy can be detrimental and will stay on your account for a long time.
Your credit score will have a very big impact on your daily life. It could affect whether or not you are able to get lending that you need or whether or not you have to pay big deposits to get utilities or a lease.