Understanding Your Credit Score
Your credit score indicates to banks and loan agencies how reliable you are in paying off your debts. Your score is a three digit number between 350 and 850 that is based upon a variety of factors. In order to understand your credit score, it is important to understand how it is determined in the first place.
Your credit score is based on different factors, including:
- Your outstanding debt: how much debt you have acquired over time.
- Your payment history: a record of all of your late or missed payments.
- Length of credit history: how long you have held credit.
- Current credit types: including loans and credit cards.
- New credit: credit sources you have recently opened.
Your credit score attempts to show the ratio of your debt to your overall income. High scores indicate a consumer with responsible spending habits, whereas low scores point to past or present debt issues. Therefore, those with high scores usually have no problem securing loans for homes, cars, or property, whereas those with low credit scores often face difficultly when they need to take out a loan or explore other credit options.
Since credit card companies make much of their profit off of high interest rates, late fees, and other penalties, they do little to help consumers understand credit and responsible spending habits, making it easy to fall into serious debt. Those who spend far too much and get deep into debt sometimes face serious situations, such as the foreclosure or repossession of a home or other property.
If you or a loved one is struggling with excessive debt, the Milwaukee bankruptcy attorneys of the DeLadurantey Law Office, LLC, can help. Contact our offices today at 414-377-0518.