A credit score is the estimation system of your creditworthiness based on the numerical statistical methods. This number is calculated by a mathematical operation with a help of your certificate of credit. It works as a guarantee that you will be able to perform your credit duties during 24 months. A credit score is a decisive factor when it comes to the approval/refusal of the credit.
Among dozens of credit-scoring models, the FICO holds the leadership. 90 % of all financial institutions use this model. FICO is, especially, popular among mortgage lenders. FICO score covers numbers from 300 to 850. It’s considered that a good credit score must be above 700 points. Then it’s a good guarantee that your credit will be approved. If you decide to apply for a small personal loan online, you will get much better options with a higher credit.
Among the categories that are included in the credit score are: a payment history (35%), amounts owed (30%), a length of the credit history (15%), new credit (10%), types of credit used (10%).
There are some free online resources such as Credit Karma, Wells Fargo or What’s My Score where you can calculate your credit score for free. Having a good credit score is essential for credit approval. Nevertheless, this issue can be improved by paying your debts and loans on time.