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What’s in Your Credit Score? Living Smart 

What’s in Your Credit Score?

Your credit score is an important number — it reflects your credit worthiness at any given point. It is the key to your financial life and is used by mortgage lenders, car dealers and loan lenders, credit card companies, landlords, cell-phone companies, and even new employers to see whether you have good or bad credit risk.

Your score is calculated based on your rating in five general categories:

 

 

 

 

 

The Credit Score Ranges

The average credit score typically falls in the mid-700’s out of a possible 850. Customers at the greatest risk have scores below 600. Those with higher scores are in a better position and usually pay lower interest rates.

 

 

 

Establish Payment History 

•  Pay your bills on time.

•  Catch up on missed payments.

•  Understand that paying off or closing a delinquent account won’t remove it from your report.

•  Contact your creditors or a credit counselor if you’re having trouble.

Be Cautious With New Credit

•  Shop for a loan within a focused period of time.

•  Apply for secured credit if you’ve had problems.

•  Check your credit report annually.

•  Don’t open new accounts rapidly if you’re new to credit.

Watch What You Owe

•  Keep balances low.

•  Pay off debt rather then moving it around.

•  Don’t close unused credit cards.

Additional Tips

  1. Apply for and open accounts only as needed.
  2. Have credit cards — but manage them responsibly or pay them off monthly.
  3. Remember that closing an account doesn’t make it go away and affects your credit score negatively.

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