Anyone who has checked into their credit score has probably found the rating scale to be somewhat confusing. There are a bunch of numbers, each meaning something different. Understanding how this rating works will help you to read your credit score effectively. There are several pieces of information reviewed by companies when they build your credit score. These factors include the following: - Your past payment history - When you pay your bills - The amount of outstanding debt you have - The length of your credit history If you have a great deal of debt or you don't have a very long credit history, you will receive a lower credit score even if there are no "black marks" against you. Recent credit applications also factor into your score. If you have made too many applications recently, this will cause you to receive a lower score. As will too much debt at high interest rates, such as high rate credit cards. A score of 700 or higher is considered a good credit score. At this level, you shouldn't have any problems getting credit, and at a low rate of interest. If your score is between 450 and 650, it indicates that your credit needs some work to improve it. At this level you'll likely have a harder time finding a loan or qualifying for a credit card without some type of security. You will also likely be paying a higher interest rate because you are considered a higher risk. If your score is below 450, your credit is in need of some serious help. At this level you likely won't be able to qualify for a loan or credit card until you pursue some form of credit counseling to improve your score. If your credit score needs improvement, there are a number of sources that can help. There are many credit counseling services available, many of which are free to use. They will be able to assess your financial situation and offer advice as to the best route to improving it - and your credit score along with it.
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