A Credit Score Follows You Around

The Credit score you earn follows you around. Your score is not good if you are denied a loan or are paying higher interest rates. This is not true on credit cards, where everyone’s rates are going up, whether they have good credit or bad credit. A bad credit score can raise your charge cards close to a 30 percent interest rate.

FICO scores, named after two mathematicians by the name of Fair and Isaac, run from 300-850. Most people are in the 600s and 700s. Above 700 show that you are a good credit risk. On the other hand, a Credit score below 600 shows the person with that score to be a risk.

People considered risks pay higher interest rates because of the possibility that the loan will not be repaid. Every time you pay a bill or make a purchase, the credit score changes. A person must pay their bills on time, and pay more than the minimum on credit card balances. Your payment history makes up better than 33 percent of your FICO score.

How much you owe reflects another 33 percent of your FICO score. The length of your credit history will contribute about 15 percent to your score, while other factors will affect the score to a lesser extent. New car loans taken out also affect the score.