Your credit score is your financial identity. With your credit score you can get more credits or increase your credit card limits. In addition, you can benefit from low credit interest rates through credit points and qualify for a promotional credit card with an interest rate of 0. However, in order to take advantage of all these privileges, you must first make your credit score excellent. Credit score perfect level is the last level that can be reached to raise credit score. In general, having 750 credit score means achieving excellent a credit score.
The scoring system used by 3 main credit reference agencies known to everyone to create a credit score is different from each other and has different credit score ranges. Therefore, it will be useful to learn your credit score according to 3 credit reference agencies. There are also different types of credit score. Generally, the most preferred type of credit points by lenders is FICO. Although not as popular as FICO, VantageScore is the second type of credit score.
Many people want to have a good credit score to qualify for a mortgage. At this point, creditors do not want to give credit to people who have no credit score or have a bad credit score. Therefore, it is very important to create a good credit history. This is essential for a good your credit score.
Doesn’t have a credit score the same as having a bad credit score?
Not having your credit score and having a bad credit score are not the same thing. Not being preferred by the lenders in both cases does not indicate that these two situations are the same. A person who does not have a credit score is more likely to have a good credit score.
Lack of your credit score means that you do not have a credit report. Because the credit score is calculated based on the credit report. The absence of anything in your credit report means that you have not borrowed anything in the last 7 years. Because the negative elements in the credit reports are usually removed by itself within 7 years. Therefore, your credit score is not calculated. This situation is not permanent. Many people who do not consider borrowing and live without borrowing do not have credit score.
If you are a university student, your credit score will not be collected unless you receive student credit and use a credit card. Some companies are reluctant to give credit if you don’t have credit points. Because they don’t know if you’re going to repay their loans. Therefore, you are among people with high credit risk. However, if you have utilities registered in your name, or if you’re paying home rent, and your landlord reports it to one of the 3 credit reference agencies (Experian, Equifax and TransUnion), you can show them to show lenders that you’re reliable and that you’re making your payments on time.
If you have bad your credit score, there are situations in your credit report that adversely affect your credit score. The first of these is a delayed payment or a payment that has never been made. If you have debts transferred to debt collections and missed public service payments, or if you have turned off your power due to insufficient solvency, these will be included in the credit reports.
Negative activities may slightly reduce your credit score. However, if you are foreclosed or bankrupt, your credit score will be very low. These situations remain in the credit report for 7 years and lenders do not want to give you credit.
What is your credit score if you have not used a credit?
If you have not used any credits, your credit score is not 0. According to the credit points created by the 3 main credit references according to their own systems, your credit score will be around 300 on average.
Your credit report will be generated 6 months after your first credit activity. Having a credit report also means that you have a credit score. Since you do not have a credit report during this period, you will see its reflection only after 6 months. There are some factors that affect and make up your credit score. Knowing these elements well allows you to manage your credit score well and you can have a higher credit score. The factors that make up and influence your credit score are as follows;
- Payment history;
The most important factor that affects and constitutes the credit score is the payment history. Credit score is a note that indicates whether you have made your payments by definition. It affects your credit score by 35%. Therefore, delaying a payment, partial payment or not paying at all are actions that will lower your credit score the most. Every day you don’t make a credit payment, your credit score decreases.
- Loan utilization rate;
The loan utilization rate is used to indicate what percentage of your total credit balance you are using as a loan. You should first set this rate to 30% or less. If you want to increase your credit score and achieve the excellent credit score, you should set this rate below 10%.
- Length of credit history, New accounts and Hard credit inquiries;
These 3 factors affect your credit score by 10%. When your credit score is generated in the first place, your credit score will be low due to these 3 elements. However, if you make your payments on time and in full, you can eliminate this negative effect over time. Already hard credit inquiries are deleted from your credit reports after 2 years.
- Credit Mix;
Lenders think that individuals with a uniform account have little financial function. Therefore, once your credit score has been established and you’ve set a course for yourself, you can start making a credit mix. This will increase your credit score more.
There are other factors that affect your credit score, but these are the factors that affect your credit score the most and you need to know as a start. When managing your credit score, you should remember to look at your credit reports.