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What Goes into Your Credit Score?
Credit scores can be computed using different credit scoring systems but the most widely used system today is the FICO score. Its formula was created by the Fair Isaac Corporation and is the one used today by many lenders, banks, financial organizations and the major credit bureaus (Experian, Equifax, TransUnion.
The perfect FICO score is 850 and although achieving this number may seem unrealistic, getting a score ranging from 720 and above is already considered as good to excellent. However, a FICO score below 620 will put you in the category of a “high risk borrower”. Thus, it is recommended for everyone to be aware of the factors that make up their credit score.
Factors that Determine Your Credit Score Payment history. Your payment history comprises 35% of your total credit score. Here, how timely you are in submitting your payments, how long it takes you to pay your past due bills, how many times you were late or missed with your payments, and everything that has to do with your payment habits count.
Credit line usage. How you use your credit limit makes up the 30% of your credit score. The higher the usage of your credit limit, the lower your credit score is. Ideally, borrowers should not go beyond 30% of their available credit. If you own a low interest credit card, be careful not to maximize your credit line as this can damage your overall FICO score.
Length of credit history. 15% of your total FICO score is based on how long you have had credit. A longer record of credit history is of course more impressive especially if it shows timely payments all throughout. Be careful about closing your oldest accounts. Dont close your oldest credit cards just because they have high rates. The trick is to use them only for small purchases and pay off your balance in full always to avoid the interest rate.
New credit. Opening too many different accounts at once or in short period can pull down your credit score. Why is this? This gives a negative impression to lenders on why you need to apply for too many credit in that short span of time. Having too many inquiries made by the lenders whom you submit application to will also affect your credit score. If you are in the habit of sending credit card applications just to get the free shirt or the free cap upon signing up, stop now. Youre doing damage to your credit and thats not worth the freebie youre getting. Remember, new credit makes up 10% of your total credit score.
Types of credit used. The types of credit found in your credit report make up the other last 10% of your score. Having a variation of accounts in your credit report is definitely a good thing. For instance, aside from credit card accounts, having a mortgage, an auto loan and other credit in your account shows your capability in how you handle your obligations as a borrower.
Credit Card Loan: Utilize the Plastic Money
Credit card has revolutionized the way shopping was done. This is basically money in plastic form. Importance of this card depends upon its use. Youngsters of today use this card as a status symbol where as a family member use them for their convenience. In whatever form you are using this card you cannot ignore the importance of it. And why should you ignore this if some one is giving loan on this basis.
Important tips
A lot of companies are providing credit card to give credit card loans. Because of tough competition borrower has to go through various introductory schemes. The rate of interest is very low and attractive in start however it is expected to grow in later periods. So while taking card you must go through your details and requirements and then make the decision. You have the freedom to use number of cards at a given point of time. Many times credit card loans do not synchronize with our income so it is possible that people may face problem regarding credit loan. In this case ,credit card loan helps you. If you are facing problem like this then a loan can be sanctioned which will help you to consolidate your credit card problem. How much interest you are paying it depends upon the intensity of your problem you are going through? What you need is to deposit all the bills of your credit card and then loan will take care of various bills. Rate of interest is very much low compared to normal debt penalty interest. Repayments entirely depend up on you and should be tackled well with the party who is going to give you the loan. Lenders will help you with the option of minimizing your monthly repayment and also increasing the time of repayment when you have some problem.
Summary So the youngster of the United Kingdom as well as the people of U.K. can get the credit card loan easily and make there life enjoyable and meaningful. Lender will also help you to take the credit card loan.