Credit Score Rationalization - What You Can Do Get a Perfect Score

Your credit score is a system that notifies lenders of the potential risk of lending the money. It is a scale that ranges from 340 to 750 - the highest score, the less the risk to the lending institution, the lowest score, the more risky.

If your score is above 700, you should have no problem obtaining a loan. You should expect to pay the lowest interest rates. However, a score below 700 is not the end of the world. You should always be able to obtain a loan, it just means you should not expect to get the best rate of interest.

Below is a breakdown of what is happening in your credit score.

Credit history (35%): For a perfect score, you need to be on time for all your payments. Even one or two late payments could reduce your score a bit. The most recent late payment, the more negative the effect on your score.

Outstanding debt (30%): Home loans, credit cards, auto loans and all public services fall into this category. Using less than 25% or your credit card limits, will ensure that this score is not affected.

Length of credit history (15%): The longer the better.

Number of inquiries (10%): This May creditors give the impression that you try increasing your debt. Try not to have too many inquiries if possible.

Types of credit (10%): The number of loans and credits that are available.

Although there is no "transition" for your credit score, most lending institutions designate 700 as the perfect score. By keeping your credit score of about 700 not only will you get the best rate of interest, but you'll be able to get a loan when you need it.