I used to apply to a lot of credit card companies. I was hoping that I could get at least one or two credit cards because I felt it was cool to have one. Imagine, you don’t have to bring money. All you have to do is to swipe the credit card when you want to purchase something at the mall. To my dismay, several credit card companies declined my application. Banks don’t usually tell why they denied your application. It is their right, at least in the Philippines. So, what I did was I researched the all the possible reasons as to why I failed a lot of times. One thing that caught my attention was he word Credit Score.

What is credit score? Why is it important if you apply for a car loan, housing loan or a credit card? According to Wikipedia, ‘a credit score is a numerical expression based on a level analysis of a person’s credit files, to represent the creditworthiness of the person. A credit score is primarily based on a credit report information typically sourced from credit bureaus.’

Credit score is a three-digit number generated by a mathematical algorithm using information in your credit report. The one that dominates the market is FICO credit score. FICO ranges from 300-850. The higher the number, the lower the risk.

It has three major credit bureaus: Equifax, Experian and TransUnion.

The following are the elements of your credit score: Payment history (35%), amounts owed (30%), length of credit history (15%), types of credit used (10%) and new credit (10%). Don’t you worry, personal or demographic information don’t affect the score.

If you have a good credit score, then good for you. Most likely, you will not have a hard time being approved for your car loan, housing loan, etc. If you have a bad credit score, you need to improve it. Here are the following tips you can do to move your score in the right direction:

You need to watch your credit card balances. It is how much revolving credit you have versus how much you are actually using it. The smaller the percentage is, the better. A tip to improve your credit score, as per Pamela Banks, ‘pay down your balances, and keep those balances low.’

Avoid credit card balances. If you have two or more credit card, and they have small balances, it is best to pay them off. Just use one or two go-to cards that you can use for everything.

Pay your monthly dues on time. Don’t be a delinquent payer if you want to have a good credit score. Take note when is your due date to make sure you’ll be able to pay on or before your due date. Much better if you pay your bills before your due date.

Now that you are aware about credit score, it is time to improve it because your credit score tells a lot about you, on how capable you are in paying your debts, on how responsible you are as a person.


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