What Does Your Credit Score Tell You?

When you apply for a loan or a mortgage, the first thing the lender does is to check your credit score. Based on your credit score, the lender decides the amount of finance you are eligible for and the interest rate at which you will be charged. So what is this credit score and how does it influence your capacity to take fresh credit?

Your credit score is a number that reflects on the likelihood at which you will pay back a loan. Credit scores generally range between 300 and 800. In general, a score of above 620 is needed to avail of a loan at lower costs. If you have a low credit score, it would indicate high risk and would make it difficult for you to obtain fresh credit at reasonable costs.

So what goes into the calculation of your credit score? Credit scores do not take into consideration your income or how much savings you have. Instead, your credit score is primarily influenced by your current debt level, your credit history and how many times your credit report is pulled up by various agencies.

  • A high debt level would lower your scores considerably as it means that you are already financially burdened with many loans and would not have the capacity to take on fresh credit.

  • Your credit history would take into consideration your track record at paying past and present dues. Timely payment of such dues would ensure a higher credit score as compared with late payments.

  • The more frequently your credit report is pulled up by various agencies, more the points docked off your credit score. However, your checking of your own credit report will not affect your credit score as you are entitled to doing so.

    • To ensure you maintain a decent credit score it's most important that you pay all your bills in a timely and consistent manner and also that you not take more debt than you can handle. If you're able to do that, your credit score shouldn't be able to trouble you too much in life. Take care and be wise with your finances.

    Sameer S Panjwani - Homes For Sale / Homes For Rent - Real Estate Listings

    More Resources

    Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exiting

    More Credit Information:

    Related Articles

    Identity Theft - Dont Think You Are Immune
    As identity theft becomes more prevalent, the need to regularly check your credit report is veryeasy to see and understand. Two big headlines in the news recently point to how closely tied yourcredit report and identity theft are.
    Credit Repair: How To Deal With Your Creditors
    If you are in danger of credit problems because you have more debts than you can handle, there are things you can do at least keep your creditors reasonably happy.First, prioritize your debts or rank them in terms of the ones that can give you the most trouble the quickest.
    Credit Counseling: Could it Work for Me?
    In the face of financial hardship, many seeking a responsible solution turn to credit counseling. Credit counseling is, all too often, the last stop before bankruptcy.
    How to Deal with Hire Purchase Debt
    WHAT IS HIRE PURCHASE/CONDITIONAL SALE?Although people often talk about "buying on HP", Hire Purchase Agreements are quite unusual these days. Cars are the most usual goods sold under Hire Purchase or Conditional Sale Agreements.
    Credit Cards - The Basics
    How Lenders Operate - And How They'll Make a Tidy Fortune from the UnknowingCredit card companies might seem like immensely clever, money making enterprises that exploit every loophole to maximize the interest payments - and profits - they are taking from you every month. Nothing, however, could be further from the truth.
    How To Prevent Fraudulent Credit Card Transactions
    What Are Possible Signs of Fraudulent Transactions see at Web Hosting Companies?Customer wants to pre-pay for a yearDomain Name Registration for 5 years or moreOrders using free email address providers like Hotmail, Yahoo, etc.Usage of multiple cards to complete order.
    The Easy Way To Gain Access To Your Free Online Credit Report
    When you apply for credit, those lending you the money want to know if you are going to pay them back. One way they decide if you are a good risk is to see how you've dealt with other people's money.
    How To Get a Low Interest Credit Card
    Consumers often have the first credit card that they ever applied for, never really analizing how the interest rate affects their payments, but many other options exist and can help consumers decrease their payments and achieve financial stability.With interest rates on some credit cards rising to over 23%, even low balance credit card debt can be crippling.
    Credit Card Expenses Are Killing Your Budget!
    Do you know the costs associated with your credit card? Do your really know? Many people assume they do but aren't aware of the hidden fees that many credit card companies are charging you month after month. In fact, if you don't keep a close eye on your credit card, you may end up paying hundreds of extra dollars per year-without ever knowing it! And if you're trying to budget your money, those hidden fees can add up!Let's take a look at some of the most common credit card fees, and then talk about how you can avoid them.
    Free Credit Report - Really
    2005 marks the year that consumers will be able to get a free credit report each year. The roll out of the Fair and Accurate Credit Transaction Act signed into law by President Bush actually began last December 1.
    SuperCharged Secret 4, Credit Card Utopia
    YOU SCRATCH MY BACK, AND I'LL BUY SOME MORE BEER!Let's just take a brief moment to recap:If you've been following along on this journey with me, learning the 5 Super-Charged secrets to Credit Card Utopia, then you now know 3 very important things:You now know how to take advantage of zero to low interest credit card offers.You now know that there is safety in numbers, and you know the magic "Who's Who" of the major credit card companies.
    Useful Tips On Avoiding Credit and Charge Card Fraud
    Credit and charge card fraud costs cardholders and issuers hundreds of millions of dollars each year. While theft is the most obvious form of fraud, it can occur in other ways.
    Useful Tips When Choosing Credit Cards
    Chances are you have received your share of "pre-approved" credit card offers in the mail, some with low introductory rates and other perks. Many of these solicitations urge you to accept "before the offer expires.
    Credit Cards - A Blessing or a Curse?
    Owning a credit card can be quite an advantage. Whethermaking online purchases, booking an air ticket or a hotelroom on the phone or simply being in need of someemergency cash, having a credit card can be a big help.
    How Credit Scoring Works
    The all important credit score! It determines the amount of loan you can get, it determines the interest rate at which you are charged for a loan, etc. Your credit score plays an important figure in your financial life.
    Credit Reports - Why Your Credit Score is Important
    If you have never heard of a FICO score before, you should become familiar with the term. Named for the firm that invented it, Fair Isaac Corp.
    Read and Understand Your Credit Card Statement
    Have you ever looked at your credit card statement and ended up just scratching your head in frustration? Well join the club! But don't take any comfort in the fact that you have plenty of company, because lack of knowledge can cost you?.right on your credit report, and once there can stay with you a while.
    Rebuild Your Credit the Right Way the First Time
    If you are one of the millions of people out there with bad credit you need to step up and start doing something to get yourself back into credits good graces. Having good credit is the only way to assure that you will get the best interest rates on any loans and credit cards that you apply for.
    Credit Repair Kit Sound To Good To Be True? It Is.
    A lot of people have bad credit. It is unfortunate that good people with good intentions are sometimes lured into credit card offers with outrageous interest rates or convinced to buy a new, overpriced car that they cannot afford.
    Ways to Look Good without Selling Your Soul to the Credit Card Sharks
    1. Buy clothes at thrift stores.