What is a Credit Score?
A credit score is a number which ranks
your credit worthiness against a specific standard. The information
which goes into your Credit Score comes from your Credit Report or
History.
For you, a higher credit score means a lower
interest rate.
Credit Reporting Companies exist to keep
track of you and your credit and then provide that information to anyone
who wants to pay for it.
There are laws concerning this
information, not least important the one that gives you a free copy of
your credit report if you are ever denied credit on the basis of your
credit report.
The main reporting companies are Equifax
and Trans-Union.
The actual way a score is calculated is a
secret to the credit scoring company, but the following factors
contribute to the calculation:
-
Amount of debt (credit limits) you
have available to you
-
The number of credit accounts you
have: Loans, credit cards, etc.
-
Your history of making payments on
time
-
The age of your oldest credit account
This last point can be a major issue for
foreign born residents:
Tip: Get a store credit card as soon
as you arrive in the country to begin your credit record, especially If
you are a newly arrived foreign resident.
How does my credit score affect my
mortgage?
The lowest interest rate you can get for
your mortgage is determined by how risky the bank thinks it is to lend
you money [more...].
Your credit score is a key component of that assessment by the bank.
Tip: If you even suspect that your
credit report contains incorrect information you would be well advised
to get things cleaned up as soon as possible by contacting the credit
reporting companies involved.
Where can I find out about my Credit
Score?
There is a a great website where you can
find out about your FICO score which is one of the main credit scores
used:
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