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Credit scores are more than just numbers. A credit score is the reflection of your overall credit character. Understanding these scores is important to knowing how they can be damaging or in understanding how to improve your credit position when making financial moves. Following are some important things you should know about your score.

Patience is very important when rebuilding a damaged credit score

A damaged credit score may be a result of credit irresponsibility in the past or a personal emergency that made you fall into debt. Either way, the things that put pressure on your credit score did not occur overnight. This means that rebuilding your credit it is not a quick-fix, either. Always remember that time and patience matters when putting your credit back into a good position. It takes months or years to rebuild a strong credit history and credit score, so you must stay firm with your goals.

Avoiding credit use can do no good

If you avoid checking your credit score and using your credit, fearing that you might fall into some debt trap and be unable to control your spending in the process, it can affect your future financial decisions. Keep in mind that lenders determine whether or not you are eligible for their services with the help of your credit scores. It also enables them to evaluate your credit risk and whether you handle your credit in a proper way. Therefore, it’s better to use just a small portion of your credit than to not use it at all, because it’s the only way to establish your creditworthiness.

Credit reports may be purchased, but you can sometimes get it for free

Credit reports may be purchased at any time. However, consumers may request one copy from the three major credit reporting agencies (Equifax, Experian, and TransUnion) at no charge once each year. Creditors, such as lending companies, are required to tell you which credit reporting agency they used in their decision making process if your loan application has been turned down. You might, then, get copy of your report to assess your current credit situation, so you can decide how to proceed.

Keeping credit card balances at a minimum helps maintain a good credit score

Credit utilization is an important part of your overall credit score. It includes the outstanding balances of your credit card accounts and the amount of your credit limits. If you have high credit card balances and a maxed out credit limit, it may hurt your credit score. Therefore, in order to maintain a good credit score range, you must keep your credit card balances as low as possible.

Credit scores constantly change

The consumer credit information that the credit reporting agencies hold is constantly changing. This means that your score will also change, depending on what information is obtained by the credit reporting agencies. You can check your credit report from www.annualcreditreport.com to help you learn your current credit status. However, one downside of credit reports is they may sometimes contain errors (such as outdated loan information or a wrong loan amount) that could be hurting your credit. Make sure your credit files are error free, because this affects your overall credit score. If you’re falling behind in your payments, try to catch up and then keep up with them, because your repayment history also determines your credit score. When you’re late with a payment, it can lower your score by several points.

Credit scores: different formulas, same outcomes

The three credit reporting agencies have different models for calculating credit scores. All of them, however, are based on the widely accepted credit score formula--the FICO score--which was established by the Fair Isaac Corporation. Since credit scores are computed differently, it can be difficult to determine an exact “good” or “bad” credit score. To avoid confusion, a credit score range is used. Credit scores range between 300 and 900, the higher the number, the better the score. A higher credit score means greater opportunities for obtaining loans at reasonable prices.

Joy Mali is an active blogger who is fond of writing articles on Finance and educating people to monitor their credit report on regular basis to minimize the risk of fraud .Follow her on Twitter to know more on how to improve your credit score.