Credit Score Facts

Your Credit Score: The Brightest Feather in Your Financial Cap

Credit scores are the most important aspect determining your financial future. Carrying a good credit score is an asset and can pave your future towards greener pastures.

On the other hand a negative marking on your credit report can be ruinous for your future dreams.

However, "There Isn't Much anyone can do for those who will not Do Something for themselves." The same is applicable for credit scores. Your prime aim is to maintain a good credit score and lead a planned life.

How to Get a Good Credit Score

To have a clear knowledge about your credit score, it is a good idea to get your credit report from the credit bureaus once a year. This will ensure your credit is being reported correctly.

Usually credit scores are within 400 to 850. If your credit scores are higher, your eligibility to get approved in a loan also gets higher in priority.

Credit scores consider 5 main categories for scoring consideration and are rated according to importance:

• Payment History - 35%;
• Length of History - 15%;
• Amounts Owed - 30%;
• New Credit - 10%;
• Types of Credit - 10%.

Credit scores are a mere snapshot. It reflects all your past credit history, plus current events. But it can change rapidly and dramatically.

Correlation between the Credit Score and Defaulters

Most lenders consider people having a credit score above 650 to be prime borrowers. This means they will most likely be approved at favorable interest rates.

According to report on credit from Equifax, 71% of the people with a credit score from 500-550 will default on their credit. Another 51% of buyers with a credit score from 550-600 will also default on their credit. Those individuals having credit scores of 650 or above are considered decent credit risks.

More than 2 million credit reports are issued each business day in the United States, allowing millions of consumers to purchase homes, cars and other durable goods and services on credit.

In the only statistically valid study conducted to date, Arthur Andersen concluded that consumers were denied a benefit based on an error in their credit report in only two-tenths of one percent of over 15,000 cases studied.

Credit Report Facts

• Experian's credit files contain records on approximately 205 million credit-active consumers.
• Each month, there are more than 4.5 billion updates to credit report information throughout the U.S.
• The American credit databases are the most accurate and secure in the world.
• There are over one billion credit reports issued annually.
• Credit reporting saves the average person about 200 basis points on their mortgage loan.

In any part of the world, it is very easy to stack up large debt. Private debts on homes, cars and credits have ballooned.

At a time when people credit is easy to misuse and difficult to clear up, one should be overly conscious of their credit score.

Janet Williams is a contributing writer to Debt Consolidation Care and is currently working on a special section in the site titled Do It Yourself where you can eliminate your debts and become debt free.