A credit score plays an important role in determining if a seller in any market decides to allow an individual to pay for a commodity over an extended period of time. This eliminates the need to have all of the cash up front to make the purchase. Many items that consumers desire to purchase require an amount of cash that it is impossible for an individual to accumulate in a lump sum.
COMPONENTS INCLUDED IN a CREDIT SCORE
Payment History – Record of payments made on specific types of accounts is 35% of the score.
Amounts owed includes amounts currently due on specific types of accounts and the number of outstanding accounts with balances is 30% of the score
Length of credit history – time accounts have been open for specific types of accounts is 15% of the score
New credit is the number of recently opened accounts is 10% of the score
Types of credit used includes presence, recent information, and prevalence of information on different types of credit used is 10%
This score is formally known as the FICO score. When the question, What is my credit score?, is asked; an individual is looking to find out the total of the rating given to their payment history. There is no single piece of information or single factor considered in determining a persons rating. The importance of the same factor can be different for different people. The total pattern of a practice of paying and other factors such as:
Amount of income
Work history including layoffs, illnesses, level of education, and frequency of payments among other factors determines the importance of individual factors.
Positive and negative information figures into credit scores
An example of a positive factor is making payments on originally agreed upon due dates
An example of a negative factor would be late payments
is what compiles a credit score.
WHO DETERMINES the CREDIT SCORE
There are three major credit agencies in existence that looks at each factor individually and then the credit package collectively to determine an individuals total score. Even too many inquiries for credit can be a negative and decrease a score. For this and other reasons caution should be exercised as to when and how frequently a person decides to “find my credit score”.
The levels shown above for each factor of the rating varies for each individual and also for the same individual at different times in their life. It is the mix of available information at the current time of evaluation that determines the weight given to each factor at that time. A person should be aware that the ability to re-establish or increase the credit score exist. This can be accomplished by the individual themselves or by consulting the services of a professional in this area of expertise.
For a detailed approach to improving your credit score, visit http://www.Financialexpert-william.com. Here you find information about what you can do as an individual and not pay companies to do it for you.
