Credit Score: What Is It and How to Get Yours For Free

In the United States - your credit score is everything. It is something that you should take care of or if you don’t - getting a phone - cable or gas line hooked up in your home can be difficult to do. There are also certain companies that take a look at your credit score first before they even hire you. Even if you are qualified to do the job - a low credit score can ruin it all for you.

Your credit score is also analyzed by creditors - such as banks and credit card companies. Just try to imagine that you need to get a loan to start your own business - with a low or bad credit score - you have a lesser chance of getting that loan approved or you may get it approved but with high interest rates. The same thing goes when you apply for a credit card. Credit card companies or banks that issue credit cards will first take a look at your credit score before they can get your application approved. A high credit score means that you have a greater chance of getting the best credit card deals with a lot of features and also with low interest rates for your every purchase using a certain credit card.

Even if you are applying for a mortgage - a car loan and other kinds of loans - your credit score will play a very important role in it. This is why it is very important for you to have a high credit score and maintain it that way or increase it.

First of all - you have to understand what a credit score actually is. A credit score will represent a three digit number from 300 to 850. This number will represent a calculation of the likelihood of whether you will pay their bills or not. This means that if you have a high credit score - creditors will be sure that you will pay your bills or your loan.

In the United States - FICO or Fair Isaac Corporation is the best-known credit score model in the country. They calculate your credit score using a formula developed by FICO. The system is used primarily by credit industries and consumer banking industries all across the country.

Credit scores are calculated in the following factors:

• Punctuality of payments – This will be 35% of the calculation. If you pay your bills on time or before the due date - your credit score will tend to be higher.

• Capacity used – This will amount to 30% of the calculation of your credit score. It will contain a ration between the current revolving debts to total available revolving credit. If you use your credit card and if you don’t use its entire credit limit - you will get a higher credit score.

• Length of credit history – This will amount to 15% of the calculation of your credit score.

• Types of credit used – This can affect 10% of your total credit score.

• Recent search for credit or the amount of credit obtained recently – This will amount to 10% of the total calculation of your credit score.

Surprisingly - not many people know their credit score and often end up wondering why they got denied for their loan or credit card application. You can easily obtain a copy of your credit report by requesting for it from FICO or from the credit reporting agencies. They will be able to provide you with a free calculation of your credit score every year. It is also a great way to find out if there are any errors in your credit report that may be causing you to have a low credit score. You can request it to be fixed in order to let you have a higher credit score than before.

Always remember that your credit score is an important factor of your life. Keep it high and you will get better deals on loans - and credit cards.