Monitor your credit report and watch your credit score

Three major credit bureaus, Equifax, Experian and TransUnion, keep a close watch on your financial dealings.  They not only keep your credit history, they calculate a score for you.  Better known as the FICO (Fair Isaac Corporation) score, it is the widely used measure by all major financial institutions before considering you for a mortgage loan, issuance of any credit card or store card, and many other things.  If your score is low or you have derogatory comments on your credit report, your application for new credit or credit line increase could be denied.  The law allows you to obtain a copy of the credit report once a year free of charge from each credit bureau.  One good strategy is to obtain a copy of your credit report once every four months from one of the three credit bureaus.  However, the law doesn’t require them to provide a score, so they may charge for it.  If an agency denies an application for credit, they are required to provide you with reasons for denial.

Your credit score is calculated based on your payment history (35 percent), credit utilization (30 percent), length of credit history (15 percent), credit mix (10 percent), and applying for new credit (10 percent).

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