You Have A Right To Know Your Credit Score

Did you know that your credit score is not a secret? In fact, you have a right to know your credit score too.

As part of our case study on credit repair companies, this is a continuation article that will enlighten you on how credit scores are calculated and how you can find out what your credit score is today.

In case you missed previous articles in this case study, simply click on this credit repair case studies link for a list.

Credit Score Is A Set Of Calculations

All three of the major credit reporting bureaus now calculate and report credit scores to lenders. If you plan on borrowing money any time soon, then you need have a basic understanding of the credit scoring system.

Each credit bureau uses the Fair Isaac and Company, or FICO, scoring model, but each has its own unique name for it.

Your credit score is based on information in your credit report. You have the right to know your credit score, and your score is likely to be different at each credit bureau. So it's a good idea to request your score from all three agencies.

Lenders use credit ratings and reports to decide whether to lend to borrowers, and how much to lend. A bankruptcy could stay on a credit report for ten years. During that time, it is possible to improve your credit score by paying your bills and showing that you can handle credit.

Other people that use credit reports may include employers, insurance companies, professional licensing agencies, and even landlords. A low score can hurt you more than you expect.

Credit Score Is Not A Mystery

A credit rating is a score calculated by a credit reporting agency according to a number of factors, and some of these factors may be beyond your control.

Understand Your Credit Score

If you have a credit limit reduced, that increases the percentage owing, and suddenly your rating may go down. This may become a vicious cycle, as other lenders may look at the reduced rating and cut their limits. If the value of your home has gone down, the percentage owing on a home equity line of credit may have gone up. It also decreases your available assets.

There are five components of your credit score, and they are broken down as follows:

  1. PAYMENT HISTORY 35% -- Are payments late? If so, how late? How often? Which accounts?
  2. AMOUNTS OWED 30% -- What are your account balances? Are your accounts "maxed out"?
  3. LENGTH OF CREDIT 15% -- How long has each account been open? When was it last used?
  4. TYPES OF CREDIT IN USE 10% -- Do you have a good mix of credit? How many accounts do you have open?
  5. NEW CREDIT 10% -- How many new accounts do you have? How long since you opened an account? Are you in good standing? How long have you been in good standing?

Your credit rating can be checked by getting a copy of your credit report.

You can ask for your credit report from each credit reporting agency, get a free annual report at the final link:

So go check out your credit score at each bureau and start working to resolve the credit issues that you may have.

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