Credit score and credit history
Credit score simply is your credit history calculated, so called FICO score. Your credit score is analyzed before a lender will approve your loan application or not and also determines what kind of interest rate you are going to be given on your loan. FICO score generally range from 300 to 850, you should aim to maintain at least 700, the more - the better. If your credit report shows a score below 600 you are considered a high risk borrower by the credit card companies. It is smart to know your credit score so check your credit report frequently. It shows if you are a good payer or not. If you always pay your bills on time you should have no problems, if however you have a habit on delaying or skipping payments your credit score will be reduced. It’s also smart to keep your debt level low related to your credit limit. Never exceed your credit limit, if you do you’ll get a lower FICO. Try to keep your balances at least 50% or lover of your credit limit. FICO also has to do with the length of your credit history, the longer credit history you have the better score you will have. Longer credit history gives your potential creditors more information about you, thus they are able to better gauge you as a borrower. Because of this it is smart to start establishing your credit history as early as possible, also because of this it is better to keep open accounts even if you don’t use or need them. Credit score is also based on inquiries, if you are always submitting new credit card applications just to see if you can get another credit card, your FICO can be affected. Not to mention if your application is denied it will definitely affect your score. Mix of credit is also important, by having credit card account, a car loan, a mortgage loan and insurances (like home and life insurance) you are showing your flexibility and dependability as a customer.
