A credit score is a numerical expression based on a statistical analysis of a person's credit history that reflects the creditworthiness of that person. It is primarily used by lenders to determine whether to lend money or extend credit to an individual. Credit scores are calculated using credit report information, such as payment history, the amount of outstanding debt, and the length of credit history. The calculation of a credit score is typically based on a credit scoring model, which is a mathematical formula that uses various factors to predict the likelihood that an individual will pay his or her bills on time. There are many different credit scoring models in use today, but the most widely used is the FICO score, which was developed by the Fair Isaac Corporation.
1. Make sure you pay all your bills on time. Payment history is the most important factor in determining your credit score.
2. Keep your credit card balances low. High balances relative to your credit limit can hurt your credit score.
3. Use credit responsibly. Don't apply for too many credit cards or loans in a short period of time, as this can be a red flag to lenders.
4. Don't close old credit accounts. The length of your credit history is a factor in your credit score, so it can be helpful to keep old accounts open as long as you're not using them.
5. Check your credit report regularly. Make sure the information on your credit report is accurate, and dispute any errors you find.
6. Consider a secured credit card. If you have no credit history or a poor credit score, a secured credit card can be a good way to build credit. With a secured credit card, you put down a deposit that becomes your credit limit.
Remember that it takes time to build a good credit score, so be patient and consistent in your efforts.