Your credit score is one of the most important components of your financial profile. It is a number determined by the Fair Isaac Company for Experian, which is one of the three national credit reporting agencies. A person’s FICO score has become a standard in the credit industry as a method of determining the creditworthiness of an individual seeking credit. These days, your FICO score is instrumental in any major purchase, from a house to a car to even smaller items like opening department store accounts or electronics and furniture purchases.
In fact, recent trends have shown that an increasing number of companies verify your credit score for basic purchases such as cell phone service, home phone service, apartment rentals and cable TV. Many employers now run credit checks on potential candidates as part of their screening process, prior to hiring a new employee.
Your credit score is determined by a series of questions, with answers that are assigned a point value. Once the points are added together, the resulting number is your credit score. In addition to the information provided in your credit report, FICO also considers at least 20 additional factors, including (but not limited to): payment history, debt to income ratio, length of credit history, overall mix of credit and more, to determine your specific number.
Consumers are always looking for ways to raise their score and actions like reducing your debt to income ratio, paying bills on time each month and ensuring that your accounts don’t end up with collection agencies are all ways to ensure that you retain as healthy a credit score as possible.
Following the FES customized Smart Savings PlanTM is a great way to adopt the behaviors that, over time, will improve your credit profile. Individuals with favorable credit scores pay less interest than those with low credit scores. By learning how credit works and following the optimal schedule to pay your creditors, you can improve your score and save thousands of dollars in interest over your lifetime as a consumer.