Credit Score 101, Do's and Dont's - By: John Rasor

A credit score is an indicator of how likely you are to default on a loan or credit card. Your credit score is determined by a combination of the following:

1. Payment History. Do you pay your bills on time? Are there recent late payments? How many times were you late?
2. Amounts owed. Are your cards maxed out? Do you have a ton of debt?
3. Length of credit history. How long have you been using credit? Have you established good credit history?
4. New Credit. Are you opening new accounts and borrowing more? How many recent inquiries do you have?
5. Types of credit in use. Do you a good mix of various accounts?

Things like age, race, color, national origin, sex, and marital status do not have any bearing on your credit score. Only positive and negative information from the five categories mentioned above make up your credit score.

Follow these tips for reaching your maximum credit score:

DO

1. Pay your bills on time. Accounts paid more than 30 days late have an adverse affect on your credit score. If you have missed payments, get current and stay current. The sooner you can begin to manage your credit and pay on time, the sooner you will see your credit score improve.
2. Keep credit card balances low. If you cannot pay the balance at the end of the month, don't keep charging it up. High outstanding debt will lower your scores.
3. Re-establish credit especially if you've had problems in the past. Getting back on track and showing the world that you are worthy of credit will raise your score in the long run.
4. Check and monitor your credit regularly.

DON'T

1. Open a bunch of credit cards or accounts that you don't need.
2. Transfer credit card balances from one card to another. It's best to simply pay them down and gradually pay them off.
3. Open a lot of new credit all at once especially if you are a new credit user. Rapid account build up looks risky if you are a new credit user.

Credit scores make a difference. Anything below 500 is a credit night mare. Hit the 620 mark and you are considered Fair, 680 is good and anything above a 700 is great. At 700 or above you will be considered a prime borrower and should have no problem getting credit and the very best interest rates. Your credits your life so take it seriously.

About the Author

http://www.creditscorecowboy.com CreditScoreCowboy.com is the one of the most unique on-line resources for free credit score reports, Identity theft protection software, and a BLOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit.

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