Why Credit Scores Differ and What That Means to You

Everyone is hoping that the New Year brings more prosperity. Lenders want to issue good loans, small businesses want to expand, and consumers want access to more products and services. Overall, these are the three things that are necessary for the economy to stabilize and begin to grow, which is beneficial to all. Understanding your credit score is perhaps the most important financial decision you can make. Your credit score will determine many different aspects of your life; many of which you may not realize. When you understand what your credit score represents, and how it can impact your life, you will be able to manage it with more accuracy and create financial security.

Credit Score – A Brief Look 

A credit score is what lenders use to determine your credit worthiness. The most common score used is the FICO Scoring System which ranks credit with numbers between 300 and 900. The higher your credit score, the more likely you are to receive credit. There are additional companies that have similar scoring systems; however FICO is the most commonly used.
Your credit score is based on the following figures:

• 30 percent of your score is based on repayment history. Late or non-payments take points away from your score. Perfect repayments increase your scoring.
• 30 percent of your score is based on your debt-to-credit ratio. For the best score, you should never have more than 31 percent of your available credit on any given credit line used.
• 30 percent of your score is based on types of credit you have. Mortgages and long standing credit lines rank much higher than newly opened credit cards.
• 10 percent of your credit score is based on other factors such as collection accounts, liens, or other legal proceedings that can affect your finances.

These percentages can be reduced even further, and often are by credit companies, but these are the basic guidelines for establishing your credit score. Your credit score can affect your potential for employment, or cause you to be overlooked for a promotion. A bad score can prevent you from purchasing a home or car, getting reasonably priced insurance or even signing a lease for an apartment. If your score is poor and you do receive credit, you will pay a much higher interest rate and have a larger debt burden. This is why it is so important to take control of your debts and credit score.
How To Take Control Of Your Credit Score

One of the best ways to take control of your debts and credit score is to seek help from professionals who utilize the highest technology, such as financial CRM software, and are poised to handle all the details in this competitive industry. There are professional companies that are dedicated to helping consumers clean up their credit scores and improve their debt. These companies specialize in negotiating with creditors to remove bad marks against your report, establish affordable repayment plans and, in some cases, reduce your debts.  These services have become one of the best ways for consumers to regain control of their finances and improve their financial future.

Author Catherine Stephens is a small business consultant and contributes this article to raise awareness of sound business practices.  Financial CRM Software, one of the most important tools that lenders will use to correctly determine eligibility and provide the fastest results you're looking for.  DebtPayPro's customer relationship management systems are designed to do common repetitive actions more rapidly and also handle calls, lists, details, and add contacts – all with a mere click or two.
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