Having good credit is essential in our economy.  Evaluating your credit report is the best way to understand you credit history.  It is all too easy to focus on one metric: your credit score. This three-digit number ranges from 300 to 850. Your credit score is calculated by compiling aspects of your credit report.  For example: 35% comes from your payment history (do you pay your bills on time, all the time?), 30% is based on how much outstanding debt you currently have (the lower this amount is the higher you will be ranked), 15% is dependent on how much credit history you have accrued over time (so try to keep accounts open, especially if you have flawless history), and 10% is derived from how many different types of credit you have (the more variation, the better).

The exact calculations are dependent on the particular bureau you are dealing with, and some lenders will factor in your income, job history, and other elements. The higher your credit score (the closer to 850 it is), the more credit you will be eligible for. Not only that, but you are more likely to be eligible for low financing or much, much lower interest rates (as much as half off!) if you have a high score.

 

Keeping your credit score above a 600 is required to get most credit, but keeping your score above 700 is key to getting some credit lines and considerations that you may need. Regularly review your credit reports, since you are entitled to one free report per year, and keep your finances in order so that you can claim the benefits of a good credit score.