Analyze Your Credit Score
Analyze Your Credit Score
So you may have thought that receiving grades and scores ended once you finished school. Well...you are wrong! Even after school, and as an adult, you are graded every single day. The one marked difference is that you are graded via a credit score, typically known as your FICO score. And understanding how to analyze and assess your credit score is the first step in knowing how to improve it. This is vital for long-term financial success, since your FICO score has a very large impact on the interest rates you will be obliged to pay, which ultimately influence your savings and payment outlays every month, every year, and through a lifetime.
Remember that improving your credit score is vital to saving money through lower interest rates and access to more credit, in addition to possible changes in perception by companies who you may apply to for employment. In short, your credit is important. Here’s how to read it:
Part I – Personal Information
This section of your credit report has your full legal name and all other previous names you may have used. This includes your maiden name, your middle name, and so on. This section also includes your social security number, your date of birth, current and previous addresses, current and previous phone numbers, as well as a list of current and all previous employers.
Part II – Credit History
This section is a compilation of all of your current and previous credit accounts. It will show your balances, your payments, and how well you’ve managed the accounts over their duration. More specifically, this section will include an account of all open accounts, closed accounts, your credit limits on each account, the current outstanding balances on each, the payments on each, your payment history on each, and whether or not you had a co-signer on any of them.
Part III – Public Record
This section includes a total account of filings in the public sphere. This includes things such as lawsuits, judgments, bankruptcies, tax liens, and child support payments that are overdue. These can remain on your credit report for 7-10 years depending on the type.
Part IV – Your Score
This is typically known as your FICO score. The FICO score is a linear account of everything mentioned till now. This is all bundled together and analyzed through a form of analysis by each of the bureaus, and the finished product is your score in the form of 3 numerical digits (e.g. 720). The higher the score, the better your grade. This typically translates into lower rates, and more access to credit since a higher score shows willingness and ability to manage payment and credit obligations more than a lower score.
So know your score. This will help you manage it and improve it. Thus, increasing your financial success in life.
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