Understanding what good and bad credit really is

To understand where you stand in regards to your credit score and rating, the first thing you must consider is the score in which you currently sit. Credit scores start at 300 being the lowest you can possibly recieve, to 900 being the highest.

The average score for American citizens today is actually around 680, so if you do check your rating and find it to be lower than this, then you should look at improving it.

A good score that will make you eligible for better interest rates and approvals on loans is actually around 720, so this is the number that you ultimitely should be aiming for.

The things that you should avoid if you would like to retain a good credit rating and score are things such as paying bills late, opening multiple accounts and quite obviously, declairing bankruptcy.

On the other hand, if you would like to improve your credit score, you should look into spreading your finances and credit across a broader range of channels such as car repayments, mortgages and any other loans that you may have. This will ulitimately create a better and more attractve credit history and potential lenders will see you as a lower risk customer, trustworthy of prompt and full repayments.

What does my credit score mean and how is it calculated?

Your credit score is actually a calculation of your credit worthiness, based against all the other people who have credit in the respective county or state. This is displayed in a numerical format and just this number alone can make or break your financial stability from one day to the next. If your credit rating is considered low, this can cause quite a few problems as a denied application can result in refusal for school loans, mortgages, car repayments and all the nessecary amenities that we need to survive. A low score will present potential creditors with the impression that you are a liability and lenders do not often take risks, unless the financial gains are in their favor. With a low score, you may still be accepted, but this will come with some very heavy strings attached, usually in the form of high interest rates and strict terms and conditions.

Who is eligible to see my score?

To obtain a copy of your personal credit rating and score, potential lenders and creditors will apply to any one of the three profit-making agencies that gather and collect your information. When you apply for a loan at the bank, they will obtain your credit report, before they are willing to consider your application. Other people that may want to see your credit score and ratings are people such as car dealers, credit card companies, private and public lenders and basically anyone who is considering lending you money via credit. Whilst you will be checked by most people, some do not and you may simply be interviewed. These are precisely the types of people that you need to avoid at all costs as it is only the professional and honest lenders that require reassurance on their side before an application is accepted.