Your credit score influences your access to credit facilities. When you need to get a loan or mortgage, creditors will look at your credit score to see if you are credit worthy. Even if you get access to a loan or mortgage, your credit score will determine the rate of the credit facility. Even your insurance rates and sometimes employability depends on your credit score.
How is the Credit Score Determined?
The most popular credit score model is the FICO score. Your credit score is based on certain factors including the following.
- Payment history
This makes up 35% of your credit score. This considers your payment patterns; if you pay off your loans on time, you will be rated high here. In the same way, if you are fond of making late payments or missing payments, it will negatively affect your score.
- Amounts Owed
This factor makes up 30% of your credit score. When calculating your credit score, the credit reporting bureau will look at the amount of money you owe to lenders. They will look at the total amount in relation to your available line of credit. If you constantly max your credit card, it will negatively affect your credit score.
- Credit History
Your credit history makes up 15% of your credit score. This comprises of the number and types of loans you have taken over the years. If you have taken several loans and you havepaid them responsibly, it will have a positive impact on your credit score. A longer credit history is considered better than a short one.
- New Credit
This factor makes up 10% of your total credit score. Opening several credit accounts and making several credit inquiries negatively affects your credit score.
- Credit Mix
The types of credit you access also makes up 10% of your credit score. If you have accessed different types of credit including other lines of credit, car loans, and mortgages in the past, it will positively affect your credit score.
From the discussion above, it is obvious that there is no difference between the credit scoring model for males and females. The same scoring model is used for both genders. Gender, race, educational background, income, marital status, income, and age does not influence the scoring model in any way.
So then, why should males watch their credit scores more than females?
The truth is that our actions play a lot of role in determining our credit score. If you treat your credit responsibly, you will have a high credit score. In the same way, you will have a bad credit score if you treat your score anyhow.
How do we know a good credit score and a bad one?
Credit score ranges from 300 to 850. The higher the score the better it is.
|Exceptional||800 – 850|
|Very good||740 – 799|
|Good||670 – 739|
|Fair||580 – 669|
|Very poor||300 – 579|
How do you watch your credit score?
It is important that you constantly check your credit score to know where you fall. Credit scores can be repaired, hence, you can work on your score if you do not like it. The first step is to check your score. The score is computed by three main credit reporting bureaus. They collect your credit information and compute your score. These three bureaus are TransUnion, Equifax, and Experian. The bureaus offer one free credit report each for a year. The report can be accessed here, annualcreditreport.com.
You can get the credit report and review it. You should review the report to check for errors and also check your score.
If you are not satisfied with the report you have, you can go ahead to repair it. There are several credit repair firms who repair your score at a fee. You can also do it yourself. The most important thing you can do to improve your score is to correct all errors on your report and pay down your debt. The credit reporting bureau will help in correcting errors if any. You can pay down your debts or reduce your debt by taking measures including debt consolidation, debt settlement, and keeping track of your debts to pay them on time. If you are able to reduce the amount of money you owe and also show a more responsible credit behavior, your credit score will improve in a couple of months.
So now back to the question, why should males watch their credit scores more than females.
Ideally, everyone should watch their credit score. They should ensure that the score does not fall below 739. The only reason why males should be cautious about their scores is that men tend to need more credit facilities than women. Since credit scores influence access to loans, the party that needs credit facilities should take care of their score so that they can easily access loans at lower rates.