Credit scoring is a system creditors use to help them determine whether to give you credit. Creditors consider information about you and your credit experience to determine if you are a good credit risk. To add to the mystique, each creditor may use its own individual criteria to determine your credit worthiness and who will get the preferred rate.
Factors that determine your credit score include the following:
Do you pay your bills on time? How large is your debt, and is your debt near its credit limits? How long is your credit history? Have you applied for credit recently? How many times? What type of accounts do you currently have?
To improve your score, pay your bills on time, pay down outstanding balances, do not take on new debt and make sure your credit report is accurate.
It may take some time to improve your score, but the savings in interest charges when you make major purchases like a home or car can amount to thousands of dollars.
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