Michael Newman’s latest ‘e-Wealth Daily’ article is titled “How Your Credit Score Is Calculated”. [‘e-Wealth Daily’ Article]


Michael Newman’s latest ‘e-Wealth Daily’ article:

How Your Credit Score Is Calculated

If you’ve ever applied for a loan, credit card, line of credit, or any kind of financing and had your application rejected, you know it can be a terrible feeling. It can be embarrassing, uncomfortable and disheartening. What can be the worst part, however, is the confusion. You may be left asking yourself, “What did I do wrong?” or “How could this have happened?”

After all, to the best of your knowledge, you were a prime candidate for the credit you requested. Well, what you may not have known is that, regardless of how responsible you look, how good of a business plan you’ve prepared, or how good of a person you are, the main factor that determines whether or not you get the credit you were looking for has to do with your credit score.

In fact, your credit score not only determines what kind of credit you qualify for, but also the terms that are attached to it. The higher your credit score, the more access you have to credit and the less interest you will pay. On the other hand, the lower your score is, the less access to credit you may have and the more likely it is that you will be forced to pay high interest rates if you do receive it.

Your credit score is calculated by the three major credit bureaus: Experian, Equifax and Trans Union. They are then given information from creditors based on your performance paying back credit.

For instance, making your mortgage payments and your car payments on time, and paying your credit card bills, or any other retail credit card. If you miss a payment, your score takes a hit. If things are all paid on time, your credit score improves. The credit scoring system was invented by the Fair Isaac Corporation (FICO). Another name for your credit score is “FICO score,” and this is how it is determined:

— 35%: Punctuality of payments (only takes late payments of more than 30 days into account).
— 30%: The amount of debt you have in relation to the credit available to you.
— 15%: The length of your credit history.
— 10%: Type of credit (installment — i.e. mortgage or car payments — or revolving — i.e. credit cards).
— 10%: Recent searches of credit, or newly granted credit.

Your credit score will fall somewhere between 300 and 850, and the higher it is, the better. The average FICO score is around 720.

If you are unaware of your credit score, it’s important to learn what it is. This way, you can make the necessary adjustments to improve your score and make credit more available to you. Although your credit score can’t be fixed overnight, making the right adjustments to your lifestyle and spending techniques can have long-term benefits to your credit score, and it can be improved.

e-Wealth Daily

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The e-Wealth Daily Bulletin brings you daily tips, advice and breaking news related to home businesses, small businesses and internet marketing. Our team of experts gives you the information you need to take your business pursuits to the most profitable level. Founded by Adrian Newman in 2003, the e-Wealth Daily Bulletin and www.ewealthdaily.com are a division of Lombardi Publishing with online newsletters reaching over 100,000 subscribers each month.

* IMNewsWatch would like to thank e-Wealth Daily for granting permission to reprint this article.

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