The basic necessity for your financial life is the credit score. It works as the backbone to your financial life.

What is Credit score?

It is a numerical calculation that based on the analysis of your credit file. It represents your creditworthiness. The score is calculated with the help of resources from the credit bureaus or the credit reference agencies.

Who use your credit score?

Your credit scores are determined before you are considered by any credit grantor. Find out who use you scores

• Credit card companies
• Mortgage lenders
• Banks
• Your employer
• Landlords
• Insurance companies
• Mobile phone companies
• Other lenders

So more or less people with who you are interacting financially are the potential viewers of your credit score. Your eligibility is considered with regards to your score.

What is the importance of your score?

Your credit score functions when you apply for any credit. The credit grantor considers your score while lending you. The better your scores are the better rates get. For example if you are applying for a loan, it is your credit score that will determine the rate of interest that you have to pay.

You lenders check your score very often while considering any changes in your credit limit or your rate of interest or to knock you for an offer. So maintaining a good score is really important to have a save and smooth financial life.

How will you determine good score?

When it comes to the model of scoring the credit grantors mostly prefer the FICO score which has been developed by the Fair Isaac Corporation. The range according to the FICO model is 300-850. The higher you score the better your prospects are. Most people in US fair 600 to 700, the higher the better. The scores above 700 are considered really god whereas below 600 is considered pretty low. Your creditors buy your FICO score from the three national credit bureaus, namely “Experian”, “Equifax” and “TransUnion”.

Check which range of population is in which bracket.

What comprises your FICO score?

There are mainly five components that determine your score. Find out the parts in the chart.

Components Percentage
Payment History 35%
Total Debt 30%
Credit History 15%
New Credit applications 10%
Types of Cards 10%

This (http://www.pueblo.gsa.gov/cic_text/money/creditscores/your.htm) is where you will get more information regarding your credit score.

How will you maintain your scores?

1. Pay on time.
2. Keep limited cards
3. Keep you credit balances low
4. Do not apply for too many credit at the same time
5. Do not close accounts with long and steady history
6. Keep different types of cards

What are the different kinds of score?

FICO (http://www.creditmagic.org/knowledgebank/FICO_score.html) itself has different names with different agencies.

For Equifax the name is BEACON Score, for Experian it is Experian/Fair Isaac Risk Model, for TransUnion the name is EMPIRICA.

Apart from these there is the VantageScore LLC which calculates your credit score as well. The vantage score is the merge of all data available at the three bureaus. This scoring model uses both the scoring (501-990) and alphabetical (A-F) ranges. It is a joint venture for all the three main credit bureaus.

Your credit score is your responsibility. The maintenance of finance and your progress financially reflects in the tri digit number. So take a step forward to build your financial life with awareness.