Your Credit score is a score assigned to you by a credit bureau. They look at all the information in your credit report and calculate your score based on that information. This number is what lenders will look at when they’re deciding if they want to offer you credit. A good credit score means that lenders are more likely to consider you to be a low risk.

First, you need to understand how exactly your credit score works. Every bill you pay, every loan, credit card and mortgage you apply for, every insurance policy you have, all of it goes into your credit report and is part of your credit history. A lot of people tend to use those three terms interchangeably, but they are actually different things. Your credit history shows how well you repay your debts. It shows how many late payments you’ve had, and if you pay your bills on time. Your credit record is a complete record of all your credit, including how many loans, and credit cards you’ve ever applied for, not just the ones you were accepted for. According to CreditCube, a popular direct loan lender, your credit score or credit rating is derived by looking at different factors in your credit history and credit record.

There are three credit bureaus, and each of them considers different factors when assigning a credit rating. Credit rating is between 350 and 850. Most people fall between 600 and 750. 850 is the highest credit score and is considered excellent.

You can ask each of credit bureaus to send you a free credit score once a year. This is a good way to manage your credit score. You should check the credit score carefully, and make sure that all of the transactions are accurate. If there are any that are suspect, you should make sure that you have documentary evidence to back up your findings.

Any time you apply for any kind of credit facility, it’s almost inevitable that the lenders will run a credit check. This could be a credit card application, a loan application, an insurance application, or even a house rental. Landlords can check your credit score as well as other lenders. They can ask for a copy of your credit score from one of the three credit bureaus – Experian, Equifax, and TransUnion. Each of them will look at several factors:

• Your previous credit performance
• Your current level of debt
• The length of time that you’ve had credit
• The types of credit available to you
• Your number of new credit applications

Each of the bureaus uses their own algorithm for calculating credit scores, so the same amount of importance is not placed on each of these factors.

There are some things you can do to improve your credit rating. Generally speaking, it takes time to improve your credit score, and things you may not think affect your credit score actually will do.

First, as said before, check your credit report. You are entitled to one free report per year from each of the bureaus. Look for any clerical errors, but also check if you are linked to any other people. Your spouse may be linked to you, and if their credit rating is low, then it will affect yours.

If you already have credit cards, keep your balances low. Living close to, at, or over your credit limit will have a huge negative effect on your credit score. You should also try to pay off the debt, rather than just moving it around. If you are struggling, then closing a credit card account isn’t going to help either short-term or long-term. You also shouldn’t start opening any new credit card accounts. Instead, you should contact your credit card company, and discuss your minimum repayments with them. Some companies may be able to offer you a payment plan to help you manage your repayments.

Also, if you are new to credit, don’t open too many accounts to rapid. It will show on your report, and it will read as though you are desperate for money. This doesn’t make you seem like a good credit risk. Only open accounts that you actually need, and manage them responsibly.

If you need to improve your credit score quickly, you might consider online instalment loans. Online loans from reliable lenders are usually short-term, and if you make all the repayments on time, these types of loan can improve your score. The other plus to online direct lenders is that they are more likely to lend to people who have been refused by traditional lenders.

Essentially, your credit score is one of the most important numbers you’ll ever have in your life. The trick to managing it is to act responsibly, and if you do run into difficulty, take steps to rectify it as soon as possible.

Check your credit score for FREE at Credit Sesame. No credit card is required.

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