Most adults know that your credit score matters whether they’ve had one credit card or five, but getting to know how that three digit number is made up is something a little less well known. Your FICO score can determine if you’re able to secure a loan, a home, and can even affect whether or not you land a job so it’s always a good idea to make sure you are monitoring your FICO score. Your FICO score, or credit score, is also a major factor when it comes to lenders determining the amount and rate at which you borrow funds from a bank or agency.
Your credit score is determined by your credit worthiness, or how likely it is that you will be able to repay the amount of money loaned to you. Many people are not aware that your credit score varies from agency to agency, so it’s important to keep track of your credit scores and reports for all the agencies available.
Your credit score is typically based on the following:
- Timeliness of payments/payment history
- Amount of total debt
- Overall credit history
- Debt to income ratio (used credit vs available credit)
Credit scores vary from 300 to 850 and the higher your credit score, the better chance you have at getting approved for a loan. Depending on the reason you are using your credit score, the lender may use different requirements to measure your creditworthiness based on the industry and type of loan.
How High Can You Go?
The easiest thing you can do to keep your credit score as high as possible is make your monthly payments on time and keep them up to date. Setting up automatic payments with an online bank account is a stress free way to make sure your bills are paid in a timely manner. If you are having a difficult time financially, don’t ignore the issue. Contact your lender and find out what options they have for you since a derogatory mark is hard to recover from, but you could prevent that from happening by just letting your lender know about your situation.
Another way to keep your credit at its highest level is to monitor your accounts. It’s important to keep an eye out for fees, fraudulent charges and over spending. Keeping your overall available balances free is a great way to maintain your credit score and prevent falling behind on payments.
It’s a good idea to monitor your open accounts, but it’s also important to only open accounts for necessary purposes only. If it looks like you are opening accounts left and right, this can be considered a negative and can actually hurt your score versus help it.
Reach Out Today!
We know that discussing your finances and your credit score can be a sensitive situation but we want to help you through the process. We are here to answer your questions and discuss your options, so reach out to the team at North Star Mortgage Network today!