Protecting your credit score is an essential task to gain access to
all kinds of advantages and good financial services. Anything from great loans
with low interest, better probabilities of landing a good job position or even
paying lower rates on insurance are reasons enough to maintain a positive
credit score. Great credit scores can attract employers or banks to provide you
with upgraded services that help boost your credit score. It is a cycle that
can work positively for anyone who has learned to manage his or her credits.
However, in order to take care of your score cautiously and with detail, it is
first necessary to learn exactly how this amount is calculated. This article
will focus on breaking down the elements and percentages that form most of
credit score calculations.
The FICO credit score calculation is broken up into five different
elements. Each one of them has different value based on how important that
element is in determining your financial stability. Credit scores are supposed
to be a representation of the financial capability and stability of a consumer.
This a trustful piece of information for any company that is considering extending
credit or doing business with you.
The first and most important element is the Payment History, which
forms 35% of the whole score. This element reflects how you have paid your
previous credits. The second most important element of the equation is the
Amount Owned, which refers to any debts you currently hold with all creditors
and gathers up to 30% of your score. The third element is the Length of Credit
History, which represents 15% of the whole value. In addition, a long credit
history usually reflects financial stability. The last two aspects, both
representing 10% of the your credit score, are the Types of credits in Use,
which refers to the mix of credit cards, retail accounts, mortgage loans or
other credits you might have available; and New Credits, which represent if you
have opened an account within a short period of time.
Of course, all this sounds great put on paper, but the credit system
can be complex and hard to understand completely. This is why many people have
dedicated their life to help potential consumers better their credit scores and
gain access to all the benefits to which they desire. Such is the case of Art
Gulle, author of the celebrated book “Act Like a Homeowner, Think Like an Investor.”
Art Gulle has had his share of experiences with credit. Living through up and
downs, and facing the many challenges that come with managing credit, Gulle
learned all the insides and the outsides of managing credits, and has used this
knowledge to help people improve their credit report to purchase a home for
over 14 years. His latest project is The Credit Journey credit repair course
and Credit Repair Coaching Programs where you can learn about a wide range of
useful personal credit solutions. You can sign up for the course by visiting www.THECREDITJOURNEY.com
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