The Real Story Behind Every Credit Score
Did you ever receive a letter from your credit agency showing your credit score and the question running through your mind is how this happened? Well, that is the typical scenario a credit holder experiences when they see how low their scores got. Don’t you just hate that to happen to you all the time? After reading this article, you will never have to suffer from that again.
First thing to know is that your present credit score is based on your past payments which comprise 35% of your overall credit score. If you have been paying religiously, then there is no room for asking questions. But if you missed a couple or more due dates, then this could mean bad news for you. Although creditors have different standards on when they will account a late payment, it is still advisable to pay on time. Second, the 10% of your score comes from your variety of credit. This means having different categories such as car loan, house rents or simple credit cards show your capability to handle an array of credit options as long as you remember when to pay all of them of course. Third, 15 % of your credit score is based on how long you have a history of credits. The better you have handled them over the years would determine good score. Fourth, 30% comes from the total amount you owe. It is weighed parallel to your income. So make sure to make your debt lower than your income so as to keep you scores floating. And last but not the least, 10% of the credit score you owe from inquiries regarding your credit. This could mean an overdue or a forgotten due date which is totally not for the best.
The root of this mysterious credit score is the credit holder’s lost of control and lack of knowledge. As much as you want to put all the blame to the credit agency not informing you ahead, you have to accept the fact that you are responsible for the kind of position you are currently on. You can now do the calculating all by yourself. With all these explained in simple terms, ignorance of the policies is no longer an excuse.
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Benefits Of A High Credit Score
Upholding an excellent and responsible credit score is always of the essence. Otherwise, you will be running a huge risk of not being approved by the creditors.
You can refer to the Credit Score Rating Scale if you’re not sure what scores are considered high or low. When your credit score belongs to the higher side, even if it’s not in the 800’s, say, 720, there’s pretty much no need to try and raise it as lenders often categorize you with those of higher scores. The reason for this is because the risk of default on loans is basically low for individuals with credit scores this high.
If you have high scores, it follows that lenders will most probably give you very favorable rates. As a matter of fact, you can even ask for the best possible conditions there are. Having a score this good can almost assure you will be eligible even for big ticket items you are eyeing on. Lenders even let you borrow more than 80 percent of the value of your home without even requiring private mortgage insurance. You are seemingly going to get a home equity loan or line of credit with an interest rate equal to the prime rate, or even below it.
Having a good credit score does not only mean you are qualified to buy a house or a car, but it gets you on top with regard to employment, particularly with financial establishments. Truth be told, many companies these days only hire people with credit scores of at least 720. Credit scores are indicators of their work ethics, loyalty and their decision-making abilities.
Nevertheless, just because you haven’t borrowed any amount of money doesn’t mean you have a high credit score automatically since credit score is based on how you borrow. Let’s put it this way, if you don’t borrow, you cannot score well, there’s simply no basis. You borrow to establish credit.
The one thing we all need to have is discipline. Know your credit score and keep it high, or work on getting it high. You’ll never know what luxury you can get in having a high credit score.
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What does it mean if I was turned down by a credit card due to “sufficient open lines of credit?”?
Question by LC: What does it mean if I was turned down by a credit card due to “sufficient open lines of credit?”?
I applied for a credit card and was turned down due to “sufficient open lines of credit.” Isn’t that a good thing? My credit score is around 809.
I applied for a credit card and was turned down due to “sufficient open lines of credit.” Isn’t that a good thing? My credit score is around 809.
Additional questions: where are you answerers copying these answers from? And what’s your incentive to post duplicate answers?
Best answer:
Answer by dis_orient_ed
You scored low because you have been applying everywhere and your credit has been check to many times in a short period. (It makes your score go down.)
You already have two or three lines of credit from that source. Even though the issuer has different names, it is the same bank.
Know better? Leave your own answer in the comments!
Categories: Credit Score Questions Tags: Card, Credit, down, lines, mean, Open, sufficient, turned