Introduction
A credit score is a number generated by using data detailed in your credit report. The range is 300 to 800/900 depending on the organisation that you use. The higher the number the better credit score you have. Credit scores are used to evaluate your potential reliability pertaining to credit obligations. In this article we will explore how credit rating came about and tips on how to repair a bad credit score.
History
Before credit scores, lenders used to determine borrowers reliability thorough analysing past consumer credit behaviour and applying that to future situations. This gave way to the more systematic method of credit scoring in the 1980s. This was first based upon a point system where lenders made note of different variables on a consumers credit report, this changed into a more efficient method with the development of statistic models which analysed different variables to conclude in an accurate credit score. In the 21st century, computer applications have made the business of credit scoring incredibly quick and efficient.
Features
Having a bad credit score can be extremely detrimental to your future financial actions, such as getting a loan or insurance. It is a good idea to avoid getting a bad credit score but if you have already acquired one there are steps in which you can repair it.
First step would be to discover what your credit score is and whether it is necessary for you to repair it. There are a variety of places to discover this but Fair Issac Corporation or FICO is one of the more well-known places.
If you discover you have a low credit score implying that you are a credit risk there are methods to repair this.
Payment history makes up 35% of your credit score, so if you have the money available pay off finances that are due.
Another way to repair your credit score is to avoid applying for new credit cards or opening up a credit account as this at first can have a negative effect on your credit score. However having more credit available in the long run can actually improve you score.
The debt that you own makes up 30% of your credit score paying this off is a viable way of repairing your debt.
Paying your bills on time is also an easy and effective way to repair your credit score.
Most of the damaging information on your credit score can only be kept for seven years, if there is something older on your report bring it to the attention of your creditor and it may be removed effectively repairing your credit score.
Tips and Comments
- A bad credit score can affect many areas of your life, like employment and loans so try and avoid it or take useful steps to repair your credit.
- There are a few places you can search to discover your credit score FICO is the most well-known organisation but there is also Vantagescore, Beacon, Pinnacle, Precision, and Empirica for you to explore.
- The higher the credit score the better, if you're credit score is low it means you have bad credit.
- Making contact with your creditors can be a great way of getting useful advice on the actions you could perform in repairing your credit score.
- Paying bills and debt are highly efficient ways of repairing credit score.
