Maintaining Your Credit Score

Your credit score is an important part of any loan approval process. Your credit score is calculated by using several criteria. The factors that affect your credit are; the amount of money that you owe on credit cards and other debts of that type, payment history, and credit history. The information off of your credit report is used in a formula to determine your credit score. Then, lenders use your credit report and your credit score, also known as a beacon score, to determine if they want to take the chance to lend you money or give you the credit to buy a car or a house. Your credit score is not evaluated the same with every type of loan that you apply for.

Mortgage and car loans are based more on your payment history than on your beacon score. Although, a low credit score can result in a higher interest rate with a mortgage or car loan. There are several ways to improve your credit score, or just to maintain it. Be sure to keep track of your credit report through all three major credit reporting bureaus to be sure that they have accurate and up to date information.

Be careful though, to not over extend your credit, meaning do not accept every credit card offer that you receive in the mail or finance purchases that you do not need to. Too many open loans or credit accounts on your credit report can affect whether or not a lender will want to take the chance that you will be able to make a monthly payment to them as well as all of your other creditors.

Ordering a copy of credit report every year is a good way to ensure that all the information on it is correct. Every person is allowed to have one free credit report every year. You can check it more than once a year to ensure that all the information is up to date, but subsequent reports do cost money. By simply keeping track of your credit report and making sure you pay your bills on time you will be in a good position to increase or maintain your good credit score.

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