What is a Credit Score, why is it important and how could you increase it.

The Web definition of 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. A credit score is primarily based on credit report information, typically sourced by the Credit Bureaus.

Basically, your credit score is a snapshot of your credit worthiness at a particular moment in time. Credit Scores evaluate your payment behaviour, debt levels and credit history. The Credit Reporting agencies such as Equifax and TransUnion use a scale from 300 – 850 to work out your credit score. The Higher your score, the lower the risk is for your lender.

Your credit score is important. Having a high credit score will help you receive the best rates on new credit and loans. Your credit score is used as a predictor of who is likely to default on their payments, whether these payments are on a loan, credit card or cell phone.

You can increase your credit score by paying your loans and/or bills on time. Try to keep your balance on your credit cards 50% of your credit limit or less. Avoid holding many credit cards or store cards. Make sure your credit reports are accurate and try avoiding having numerous credit checks or inquiries by the credit bureau through applying for credit. Only apply for credit when you really need it.

You’ll probably be able to improve your credit score within a year by reducing your debts, maintaining record accuracy and paying your bills on time.

For more information or tips on credit, please visit www.facebook.com/prudentfinancial or visit our website at www.prudentfinancial.net.