Do you know the word "Credit Score", is familiar to all American individual. Its a most important issue for survive in American soil. Everybody should manage their credit score individually. But now a question has arisen. How we can manage it? Whats the main procedure, through which we can gain a good credit score? I Belinda trying to give some basic information regarding credit score to my all US friends.


First of all we've to know what is a credit score and why it is so important in our life.
Credit score denotes: Basically it is a parameter through which a lender can guess about your capacity of repayment or creditworthiness on their lending decision.

A credit score is a particular number or mathematical figure which has made on the basis of a statistical evaluation of the credit files of a person. This is representing the creditworthiness of that particular person.

If you want to take a loan for any purpose the lenders want to know and can ask you that do you have the capability to repay the loan money or not. Your credit score provide them to get a clear idea about that. So now we can sure about it that with the help of credit scores the repayment ability of an individual can be judge, appropriately. This is nothing but just a clear reflection of our credit activities in the past. If you want to apply for a loan, your credit report will be decide that are you eligible or not for taking it. If your credit score is very high that means you have good repayment history in past and easily you can avail a loan under a manageable term and condition. On the other hand if its low, you may deny from the lenders for a loan.


Now we've to know that who will provide our credit score? Basically credit scores are provided by credit reference agencies or credit bureaus which mainly on the basis of credit report information. Credit scores help the lenders to decide who is eligible for a loan at what credit limits and what rate of interest. Credit card providers and banks can also utilize credit score to asses different types of risk which may arise from lending money to the borrowers.


The method of credit scoring is followed by different type of entities like, insurance companies, mobile phone companies, government departments and employers.

  • Different technique for calculating credit scores
CREDIT BUREAUS

In United States, credit scores are provided by following principal credit bureaus:

  • Experian
  • Equifax
  • Trans Union

Different types of credit score.

Every credit bureaus has their own credit score. They are follows:

  • Score Power of Equifax
  • Credit score of Trans Union
  • PLUS score of experian



The above credit bureaus are also selling Vantage Score credit score. One of the third party scoring system is FICO which has designed by Fair Isaac Corporation. The range of FICO credit score is 300 - 850.


Now I am going to highlights some trick by which you can improve your credit score. They are following:

  • You've to use your credit cards when you are sure about repaying the dues and never use credit cards for small purchase, which can be done by cash.
  • If you have more than one credit card you've to try to repay the cards have the maximum interest rates first.
  • Try to repay as much as possible each month because there is a minimum monthly payment for every credit card. The higher you repay the less interest you would have to pay.

  • Always try to submit your charge within the appropriate time. Should not spend more time than the credit limit because it will provide the additional charges.
  • Always try to pay your bills timely.
  • Try to repay the credit card debts instead of transferring.
  • You can go for a new credit card if there any advantages offered by the new card are more than current one.
If we can follow all the above tools, I think our credit score may increase, and we can erase our credit card debt easily.