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Credit Repair

5 Things You Must Know About Your Credit Score

Credit scores are confusing to many people. Add to the confusion the fact that each credit reporting agency has its own formula that can generate a different number and you can see how it is nearly impossible to understand credit scores. To help remove some of the confusion, here are five things that you must know about credit scoring.

  • Lenders can customize the numbers they want from the credit agencies, producing multiple numbers.
  • If you are denied a loan or given a less favorable rate, lenders must tell you the score used, which scale was used, along with the name of the credit agency that generated the score.
  • You can get a free credit report once a year, but you will have to pay an average of $8 to get your current credit score.
  • Your credit score can change daily depending on how high your balances are.
  • A large portion (about 30%) of your credit score is based on your credit utilization ratio. Say you have a number of credit cards with total limits of $10,000. Your credit score will be higher if you carry less than $2,500 in combined balances. As your balances creep up, your score creeps down.

It is in your best interest to check your credit report once a year at least. Go to www.annualcreditreprot.com to do that.

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