To understand your credit score first you need to find out what scores are reported by credit report agencies. there are mainly three credit report agencies i.e. Equifix, Experian and TransUnion.
So once you get your report you will be able to see a score whose range is 300 i.e. lowest to 850 which is highest. sometimes your credit score mention as FICO score. credit bureaus states algorithm so that you will pay a loan on time according to algorithms.
If your credit score is in between 680 -700 or above this range that means your credit score is good. you van get a better rate on big loans if your score is 700-760.if your score is more than 760 or up to 760 then it will be considered the best credit risks.under the exact credit transactions act, you can get one annual copy of your credit report free of cost. if you want to get some more information then visit www.annualcreditreport.com or call 877-322-8228. after knowing your score you can improve your rating after following these tips from myFICO:
1. Make the payment of bill on time.
2. Your outstanding payments can have bad affect on your score. but if you pay your bill on time, your score will be better. for instance, if your credit rating is 707 then it can easily increase by 20 points by paying all bills on time for one month.
3. Maintain your balance low on credit cards. High outstanding can lower your average score by 70 points.
4. if you do not need new credit card then do not open the number. new account will lower your average account age up to 10 points.
5. manage your credit card properly. in short, credit card and timely payment will increase your score.someone with no credit card tends to be higher risk.
6. if you close your account, it does not mean that your account has been disappear. A closed account will show your credit report and may be figure out your score.