A credit score is a number between 300 and 850 that ranks how risky of a borrower you are. The score is published by the Fair Issac Corporation (thus credit scores are also called FICO scores), and includes a number of factors about how you borrow money
is determined by whether you pay your bills on time or not.
is based on how much you are currently borrowing and how much you're allowed to borrow.
is how long you have been using credit, whether it's in the form student loans or just using a card for small items.
is determined by the lines of credit you have opened recently (a lot is bad.)
is determined by how many and the types of credit you have, including credit cards, student loans, auto loans, etc.
A secured credit card makes you a zero-risk lender. You make an initial deposit, usually equal to your line of credit (if you want to borrow $200, you have to post $200), and borrow against it to build up your score. When you close your account, you'll get your deposit back.
If a parent or other trusted person with an established credit history (NOT your roommate) signs the credit card with you, you can borrow against your co-signer's (hopefully high) credit score. This lets you build your own. Keep in mind that your missed payments and debts will affect their credit score, so don't abuse their trust.
It's the simplest and strongest way to show that your a reliable borrower and aren't likely to default.
It's okay (even encouraged) to charge purchases to your card, but if you're constantly maxing them out, it looks suspicious to lenders. The ideal is to utilize around 30% of what you can borrow(also known as credit utilization). Keep in mind that this includes credit card purchases that you made this month and plan to pay off, they won't earn interest but they are part of your debt.
Sudden increases in lines of credit can make lenders wary and it becomes much harder to manage purchases and loans from multiple sources.
Not to be confused with having a lot of credit, having credit for different things like student loans, a mortgage, and a credit card will create a stronger credit score than three credit cards.
Cash advances tell creditors that you are short on money and may not be able to make your payments and may even default.
You have 3 credit scores that are reported to FICO from the three companies Equifax, Experian, and Transunion.Recent legislation has given you the consumer the right to check your score once a year from each company. You have the choice to look at all three scores at once, or you can stagger them every 4 months so you have a more consistent idea of your report.The best way to check your report is to go through www.annualcreditreport.com. It is the only site that gives you the chance to see your reports for free. Many other sites claim to let you view it but often actually require signing up for a membership. Many credit cards will give you your score for free. While they usually not an exact measure of your score, they are typically pretty accurate.Once you have chosen to view a report you should look it over and make sure that there are no errors or problems on your report.If you want to see your actual score each site requires you to sign up for a membership and then you will be allowed to see the score. Be careful though, if you forget about signing up for the membership the trial period quickly ends and you are then forced to pay the monthly fee and will be charged even if you aren't checking your score.
You may find discrepancies on your report. These errors can cost you jobs, loans, and housing opportunities, so it is best to get them taken care of immediately.When you find an error you should first contact the company through whom the error is listed and try to get the incident resolved.
Always keep good records of any communications with the companies.Remember to make copies of documents that are exchanged through the process of fixing the errors. Always request written documents when the incident is cleared and hold on to these in case they find their way back on to your report.