So, what is a good credit score? Every lender and borrower is concerned about credit scores. You can check your credit score with your bank or creditor. In the US, credit scores range from a rock bottom 300 to a sky high 850. If you are well above the middle, then you have a good credit score. To be a little more specific in what is a good credit score, anything above a 700 is considered good credit score. A score tells a lot about your financial management skills. Major transactions and project proposals require a good credit score. As an example, if you are tendering for a construction project, you will be required to produce proof of financial responsibility and creditworthiness. If you are in good books with your bank, the bank manager will give you a credit rating letter to support your project proposal.

A credit score range depends on a variety of factors. Generally, the elements of a credit score include the value of the debt owed, the number of late payments, the number of accounts and public records. Your credit history will determine the score you have on your report. It is important to note that credit scores change over a period of time. Your current repayments and efforts to settle your debts will also be taken into account.

The U. S. Law does not permit the use of personal information in determining credit scores. Details about your race, religion, sex, national origin or marital status are not used in determining credit scores. Your income, age, occupation, location and employment history does not have any effect on your credit score. Information obtained through consumer requests cannot be used in determining your credit score. Any type of account review, employment and credit inquiry made by the lender cannot be used to determine your credit score.

The weighting system is used to determine credit scores. We shall not dwell much on the system because it is a scientific method that can only be understood by mathematicians. However, erratic payments are the main factor used in arriving at a credit score. If you have a history of erratic payments, you must improve your payment behavior.

Credit scores are divided into two categories. The first type of score is called the generic score. A generic score is a common score used by many lending companies. This score reflects the overall risk carried by a borrower. The second type of score is called the custom score. The custom score is based on the the person's credit reports. Individual lenders are best suited for this type of score because it is tailored for a specific business. Custom scores are available for special purposes such as vehicle and housing loans.

Lenders use credit scores for specific reasons. The most important thing about credit scores is that they are unbiased, objective, balanced, reliable, accurate and scientifically derived. In the past, lenders did not have a proper system for assessing creditworthiness. It was kind of difficult to qualify for credit because most of the assessment was done manually. Lenders had to peruse through a person's payment history and count the number of late payments including recent payment defaults. In the end, the personal opinion of the lender was the main determinant in coming to a conclusion. However, late payments do not necessarily mean that you cannot repay the credit. A lender may incorrectly assume and connect your current debt to your ability to pay the credit. Such random assessment is clearly not fair. Modern credit scores are devoid of human assumptions. They rely on mathematical algorithms that produce a balanced assessment. Objectivity has helped many consumers to qualify for credit. The days of being judged by appearance are over. Your past and present credit status is solely used to calculate your credit score.

If you are concerned about your credit score, there are many ways to improve credit score variables. You must take action on items that you want to change. Identify these items and how they affect your credit score. When you have done this, you must know that it may take some time to improve your credit score. Study your credit history and see how you made your payments. Identify all the late payments and think about what you should have done to avoid this. Maybe you were too confident about repaying the credit on time or you never took time to think about the consequences. The current details on your credit report are very useful. They show you where you are, and where you are going. Where you are, is a result of what you did in the past. The current status is an opportunity to turn over a new direction. It is not too late. What you do now, can improve or worsen your credit status.

Here are five things you should do to improve your credit status: First, it is important to make your payments on or before the deadline. Late payments contribute to a bad credit report. You must not buy time or forget. In order to avoid late payments, you must plan ahead. Include the credit repayment as part of your monthly budget. It is a good idea, to mark credit payments as high priority. Separate your monthly payments and clearly define each payment. Dont combine several monthly payments into one payment. You may lose track of your credit repayments. Remember that repaying on time will secure you more credit in future.

The second thing is to maintain a small amount of balance on your credit card. Accumulating debt is one of the reasons for a negative credit score. You will need to stop using your credit card as soon as possible. We all know how easy it is to max out the credit card. You must also desist from opening multiple accounts. Many people resort to opening multiple credit accounts as a way of escaping debt. Opening a new account to fund another account will not reduce your debt. You are actually making things worse. Finally, it is important to resolve your debt sooner rather than later. Delaying will increase the debt. Some people think that terminating a credit card is one way of avoiding negative scores. This tactic will not increase your score. The amount owed will remain the same regardless of the number of cards you have.

Another contributing factor to poor credit scores, is applying for credit, for the sake of increasing your income. You must only apply for credit for a few items. Dont try to pay up your extra personal expenses through credit cards. Whenever you make a new application for credit, the information will be indicated on your credit card report. This will raise a red flag to lenders who already know your liabilities.

Rebuilding your credit score demands a lot of discipline and common sense. The process takes a long time, and it cannot be done overnight. Your commitment in rebuilding your credit score, will show in your repayment efforts. The sooner you start paying your debts, the better. You must know that there are certain negative aspects that will linger on your credit report for many years to come. Inquiries will be shown on your report for a period of two years. Delinquent or erratic payments stay up to seven years on your report. Public records will stay for seven years, while bankruptcy will show on your report for a period of ten years. Tax lien defaults will linger for fifteen years.