Whether you’re trying to buy a new car, looking to purchase a home, or need to find expensive furniture items, you’ll need to know more about your credit scores, so that you can find out which items you need to pay off, or which accounts may be on your report that don’t belong to you. And, even though you may have heard of fixing your credit, you may still be wondering ‘What are credit scores?’ Here is some information that will help to answer this question, as well as resources that will help you to increase your score.
Your credit score is actually a mathematical algorithm or value assigned to you based on your credit report. This means that the higher your score is, the better your report is. A good report is based on having your accounts paid off in a timely manner, or not having an abundant number of past due accounts on your report. Your score is also based on millions of other people who are also being scored, since the number is used as an average as well.
But still, what are credit scores? While you may not understand why this number is so important (especially if you’ve been making your car or mortgage payments on time), you should definitely keep up with your score if you want to get instant approval on credit cards–or find a mortgage that is affordable if you’ve been renting for a while. Becoming a homeowner is one of the main reasons that people want to improve their score, and the type of interest rate or home that is available to you is directly based upon this score.
To further answer the question ‘What are credit scores?’ you should also be familiar with the score that is used for numbering. Your score could run anywhere from 300 to 850, and most people have scores between 600 and 800, which is considered average. If you have a credit score that is over 720, you will get the best interest rates for automobile and home loans; scores under 600 are considered poor, and should be corrected as soon as you can.
In addition to paying on your bills late, or paying the minimum balance only when your bills are due, there are a number of other factors that can lower your score. If you have just graduated from college, you should develop a plan to pay your student loans off as soon as possible; the more these stay on your credit without being paid, the lower your score will be. And, if you have medical bills that need to be taken care of, talk to your physician’s office right away to make payment arrangements.
For more resources that will answer the question ‘What are credit scores?’ you can also visit sites like www.bankrate.com or www.fico.org.