To have the best chance of improving your credit score you will need to have a good understanding of how it is calculated as that will help you to decide on the actions you need to take.
In the last post I talked about how to deal with excessive debt. This credit score post is the fourth in the Budget 101 series, if you are just tuning in you can get caught up in the Budget 101 category.
Credit score is a numerical calculation based on a number of factors that helps lenders decide whether you are a risk to lend money to.
The numbers generally range from 300 to 850 and allow lenders to see how well you are at paying off your debts.
The higher this number is the more likely you are to get credit and you will also usually get it at lower interest rates because of the fact that you will be regarded as a lower risk for repayment.
If your score falls below 600 you will probably have trouble getting credit and if you do you will be expected to pay higher rates due to the risk involved.
Scores over 720 are regarded as excellent and you can expect to get good rates.
This is just a guideline as some lenders place more importance on credit scores than others and while you might have difficulty getting credit with one lending institution that is not to say you will have difficulty with all of them.
Often you can discuss your situation with the lender even when you have a low score and still get them to finance you at reasonable rates.
Sometimes they will look at your whole credit history and take that into account rather than just the current poor score.
Your credit score comes from the calculations that are determined by the credit bureaus and are based on mathematical data that is arrived at from your credit report information that is supplied to the bureaus from people who have lent you money and from people you owe payment of bills to.
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Disclaimer: I am not a financial professional and don’t play one on tv. The information provided on Single Mom on a Budget.com is my own opinion and should not be construed as fact or advice, and you follow it at your own risk. You are responsible for your own personal finances and should not rely on this site to make the final decision for you. This blog is my means of communicating my experiences to you and to prompt you to think and consider your own situation, but you are 100% responsible for any actions you take. Always consult an attorney or tax professional regarding your specific legal or tax situation.