There are several things that companies will review when building your credit score, including the following:
- How you've made your payments in the past
- When you pay your bills
- How much outstanding debt do you have?
- The length of your credit history
If you've got a lot of debt or you don't have much of a credit history, you'll get a lower score even if you don't have any marks against you in the way of late or missed payments.
Recent credit applications also factor into your score. If you have made too many applications recently, this will cause you to receive a lower score. As will too much debt at high interest rates, such as high rate credit cards.
Generally, a score of 700 or higher is considered good. If your score is in this range you shouldn't have any trouble getting credit and you should receive the best interest rate possible.
If your score falls somewhere between 450 and 650, your credit score needs some improvement. You'll probably have a harder time finding a loan or qualifying for a new credit card unless you have some kind of security to back it up. You may also find you'll be paying a higher interest rate because you're considered to be a higher risk.
If your score is below 450, your credit is in need of some serious help. At this level you likely won't be able to qualify for a loan or credit card until you pursue some form of credit counseling to improve your score.
If your credit score is needing some help, there are quite a few place to get it. There are many credit counseling services out there that are free to use. They'll help you assess your situation and offer advice as to how you should improve it.
