Let me explain you what is "Credit score" -
A credit score is a numerical expression based on a statistical analysis of a person's credit files, to represent the credit worthiness of that person, which is the perceived likelihood that the person will pay debts in a timely manner. A credit score is primarily based on credit report information, typically sourced from credit bureaus / credit reference agencies.
Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt. Lenders use credit scores to determine who qualifies for a loan, at what interest rate, and what credit limits. The use of credit or identity scoring prior to authorizing access or granting credit is an implementation of a trusted system.
Credit scoring is not limited to banks. Other organizations, such as mobile phone companies, insurance companies, employers, and government departments employ the same techniques.
Everybody think that your credit score is important, it is, but there is an even more important number you need to know about. This is called your FICO score. FICO score is what your bank and most major creditors use. It is very hard to calculate your fico score by hand.
Do remember that it is not good idea to post many enquiries about credit score , particulerly FICO score and it may result in FICO score drop.Your FICO can drop because of to many inquires on your credit, or your debt ratio. So be very careful applying for credit. Because this could do more damage to your credit.
Some tips to save your credit score:
1. Minimize having too many retail cards (Like Khol's, sears, WAL-MART, TARGET, JC Penny ... etc), they may offer you one time discount but imagine if you miss out an one in time payment can damage your credit history like anything . (Thanks to Geetha & Srinivas for suggesting this tip and it is out come of their real time experience and worth to follow this tip).
2. If possible, enable auto payment to all household bills like Power, gas, internet, phone ... etc. So that you can get rid of major headaches. (I am sure many of people already doing this).
3. Minimize credit score inquiries.
4. Never cancel your first credit card, it seems there are some benefits if you maintain your firstever credit card. (Again this Tip is from Geetha & Srinivas , thanks to them ).
Please feel to share your ideas and tips .. others may benefit out of it. Do send mail to msrprasad@gmail.com to share your tips . I shall update this post if i get good tips from people.
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