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All About Credit Scores

Your credit scores may be the determining factor of your buying a house, car, boat or any other large asset. Not only will this score determine if you can purchase these valuable assets, but it will determine the amount of money you will pay. It is highly important that you monitor your credit score on an annual basis. If you notice your three digit credit score is getting lower, it is time to re-evaluate your finances to see if you can improve it.

Credit scores range from 350 to 850. One attribute of computing your score is your payment history. If you paid your bills fully on time in the past, 35% of your score will receive a high number. In addition to being computed into your credit score, your payment history is recorded in writing which informs lenders and others of the dates you paid or missed.

Debts that have not been paid effects 30% of your credit score. Outstanding debts are incurred when you have a bill that you either could not pay or refused to pay. They are usually long overdue. Examples include student loans that have gone into default. They also include credit cards that have not been paid as agreed by the debtor.

Your credit score is also based on the length of time you have established credit. About 15% of your score is attributable to the entire time you had credit. This shows lenders how long you have been consistent in paying your bills.

Credit scores also involve the type of credit you have. For example, you may have obtained an installment loan when you purchased an automobile. Also, you may have acquired a credit card when you were in college. Credit and loans of these and other types account for 10% of your credit score.

If you have a low credit score you can work to improve it. One way is to contact your creditors for payment arrangements.

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