One number could stand between you and your dream house. It may seem unfair for one number to define you, but to many lenders, it does. Not only can that number determine whether you get a loan, it can dictate the exorbitant or reasonable interest rate attached to it. Insurance companies, landlords, employers and even utility companies routinely use the number to learn about you and your financial reliability.
Yourcredit score可以极大地影响你的生活,幸运的是,you hold the power to change it. Knowing how to improve your score has become an important skill in today's credit-dependent society. To learn how to improve it, we need to understand what it means and how it's calculated.
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Your score is based on yourdebthistory and your existing lines of credit. The companies you do business with report information about your account activity tocredit reporting agencies, such asExperian,TransUnionandEquifax. The agencies gather your information and pull it together in acredit report.You are entitled by law to afree credit reportonce every 12 months. It's a good idea to take advantage of this opportunity, especially if you plan to apply for amortgagesoon. You can see it by going toAnnualCreditReport.com. With that report, the agencies calculate your FICOcredit score, a three-digit number between 300 and 850 that is supposed to accurately assess and succinctly sum up your creditworthiness.
In the past, the agencies kept the method for determining credit scores secret, lest people try to manipulate their scores artificially [source:Curry]. Under pressure, however, they released the method they use to establish a credit score. Here's a list of the different factors and their weights, according tomyFICO.com:
- Payment history: 35 percent
- Debt: 30 percent
- How long you've had accounts: 15 percent
- New accounts: 10 percent
- Types of credit: 10 percent
For a fee, you can find out your credit score from the different reporting agencies. A score less than 620 might land you on a do-not-approve list, but a score greater than 760 could position you nicely for the bestinterest rates[source:Lankford,Weston,]. If you think your score might need a boost, there is one action you can take that will improve it the most. On the next page, we'll discuss what that is.
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