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Credit Scores

Your Credit Score can range from 300-850, and is used by lenders to estimate how risky lending to you is likely to be. The better your Credit Score, the better your access to lower interest rates and larger loans. It's very important to bear in mind that your Credit Score is more of a Credit "History," and reflects changes over time ? both positive and negative. A longer credit history is usually seen as a positive by lenders, and your Credit Score should naturally rise as you make your payments on time.

Similarly, as you miss payments and make them late, your credit score will start to drop. Another important factor that can influence your score is how much of your available credit you actually use each month. If you only use 10% of what you have available each month, then your credit score might rise. Using 50% of your available credit is generally considered to be a large amount, and may negatively affect your score. Again, don't forget that your score is a time history. One month where you use a large amount of credit to make an important purchase or two isn't going to ruin your score.

Obviously your score can be affected by other things too, such as how many different lines of credit you take out. Multiple lines of credit are usually considered to be a good thing by lenders ? if you have a long history of making payments on time ? as it shows your dependability. Opening many new accounts within a short period, however, will stand up as a red flag to lenders worried about why you need them and how likely you are to pay them back. Any defaults or foreclosures will also clearly have a very large effect on your credit score. But given time everyone has the ability to change their score, and by making your payments on time and avoiding these negatives you can access the best loans and rates once more.

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