What is my credit score is an vital question to get answered for financial reasons. To know What is my credit score you will have to first know What is a credit score. The credit score which is also known as FICO score is a concept made by Honest Isaac Corporation. Fico score is proprietary of Honest Isaac Corporation and hence the formula used to calculate the Fico score is under the wraps.
Credit score is a three digit number which defines an individual’s credit worthiness. Higher the credit score better is an individual’s credit worthiness and hence lower is the risk of lending to the individual.
From Bankers to employers many use credit score as a base to determine the financial risk. Hence it is very vital to know how much is the credit score and try to improve the credit score as much as possible, though not everyone lends based on credit score.
Excellent credit score ranges anywhere from 825 to 650. Low credit score is from 575 to 650. Anything below 575 is considered as Terrible credit score. For someone with a excellent credit score the rate of interest will be lesser as the risk associated is lesser compared with someone with a terrible credit score.
Credit scores are determined based on the following factors.
1. Payment history
Payment history says about your past financial obligations and how quickly you met them. Problems such as bankruptcy will reduce your credit score. If you paid your credits promptly you will get a higher credit score.
2. Current debt
How much you owe contributes to your credit score. This factor considers the present financial position. If you are in debt with a large number of sources then obviously it is going to pull down your credit score significantly.
3. Duration of Credit History
If you are having a excellent credit history over a long period of time, then you will land with a excellent credit score. It is similar to someone with longer work experience is preferred over someone with lesser work experience. Having a excellent credit history over longer time period is vital.
4. Number of Credit
If a person has more number of credit cards, then it gives a negative impression about the person’s finance and so it will lower the person’s credit score. Someone with lesser credit sources will be given a higher credit score.
The author of the article has excellent knowledge in the finance sector. More information about credit score can be found at http://xcreditscore.com
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