The Credit Score is a score assigned to each person in the United States with a social security number. It is supposed to reflect its ability to repay its debts. In other words, it establishes your financial profile to see if you are a serious student (if you pay your bills and repay your debts on time and well) or a deadbeat.
So, the higher your score, the higher you will be appreciated banks and you get a credit card or a loan easily.
What is Credit Score?
It is very important to have a good Credit Score because it allows obtaining a credit card, credit lines, credit, and more generally facilitates any transaction of daily life.
So you can get an interest rate on a loan much more interesting, save on insurance premiums home or open an account with an electricity provider or mobile telephone without sureties, if you have a good Credit Score.
FYI, some phone companies may require a deposit of $ 1,000 for an opening line to a non-resident, a tourist, or someone who does not (yet) Credit Score.
Method of calculation
Some indications:
• 35% of Credit Score is based on the constancy of payments.
• 30% of the grade is based on the percentage of your credit capacity used. In other words, you will be better noticed if you use a small portion of your credit lines instead of enjoying the maximum permissible cards GAP, TARGET and MACY'S.
• 15% of the grade is determined by the length of credit history.
• 10% of your Credit Score is based on the type of credit you have, or use property (car, student loan, mortgage loan revolving (credit cards or lines of credit) or otherwise.
• 10% of your Credit Score is based on the research you made to obtain credit. You should know that every time you apply for credit, it affects your Credit Score negatively.
Operation
• 330-619: You are a bad student. Moreover, in banking parlance, they call you a "Credit Leper" (Credit leper)...
• 620-659: A student really means, so some credits under certain conditions may be considered.
• 660-720: Student seriously and progress, with a Credit Score considered good. For you must know that 720 is the average American credit. it is the score that is often asked for a credit or financing normal conditions.
• 721 - 750: Very good topic. You meet all the conditions to obtain financing or credit terms quite satisfactory.
• 751 +: You are first class with an excellent Credit Score. You can avail loans at very favorable terms.
The credit history: patience and perseverance...
Fortunately Credit Score is not fixed even spend a score of 330 (most often the case with newcomer) 849 is not instantaneous. So we build credit history (credit history or credit report) over several years in order to obtain the best possible rating.
However, the thing is not necessarily easy because you must find the delicate balance between open credit lines to show they are obtained, but not too much to show that not need ... In short, to obtain credits, but do not live on credit.
The chicken or the egg?
Build their credit history, debt repayment involves and their systematic repayment at maturity.
But how to pay its debts if for credit, you must have a Credit Score...? There are several ways to start, from scratch:
1 / The line of credit
The bank allows you to open a line of credit in an amount equal to an amount that you have placed in a savings account and used to ensure your credit. Of course, this solution costs a bit of money (interest credit granted is higher than the account that earns interest), but it can start.
2 / Credit card guarantee
It is a mechanism somewhat similar to the previous used by some banks: a card with a credit line is granted in exchange for the similar amount recorded on an account that serves as collateral.
3 / Be co-partner on a credit card
Your credit allows you to be a co-signer on the credit card of another person (your spouse in general). Please note that the responsibility for repayment is shared between two authorized users.
Canadians are also using this scoring system but in Canada, we speak of Approval Credit. Therefore, they do not need credit score in the USA. There are there two credit reporting agencies: Equifax Canada and TransUnion Canada. Simply, banks based in the USA refer to one of these agencies to know the credit rating of the client.
In the USA, your credit score is managed by three agencies: Equifax, Transunion and Experian. When checking your credit, you send your social security number to one (or all) of these three agencies meet a credit report or credit score.