Credit Score Articles

More Employers Check Applicants' Credit Scores

More employers than ever are checking the credit scores of potential applicants, and that could create a vicious cycle, according to a report from the Minneapolis Examiner. Recent statistics have shown that more than 60 percent of companies ran credit checks on applicants in the first quarter of 2010.

The situation can create a catch-22 for jobseekers, who may have bad credit because they have been looking for a job for a prolonged period of time, and can't get a job because they have bad credit. While there is national legislation in the works that would govern how and why companies could do this, it hasn't been enacted yet, and unemployed people are in a bind.

Your credit score is considered the single most important? piece of financial information about you, because it tells anyone who looks at it a great deal about how you handle your money with one three-digit number.

There are several aspects that go into making up your credit score:

The biggest portion of your credit score, 35 percent, is made up of your credit history, or how regularly you pay your bills. If you habitually pay them on time, it will be reflected, but so will a small misstep. Even one missed payment, no matter how late, can have a large negative impact on this portion of your credit score. How late that payment was plays a role as well. However, making more payments on time after missing a due date can begin the repair process just as easily.

How much you owe to creditors comprises another large chunk of your credit score at 30 percent. The proportion of what you owe versus what you're allowed to take out is the most important aspect of this portion.

The other 35 percent of your score is comprised of a combination of how long you've had your accounts (15 percent), the kinds of credit you use (10 percent) and how much new credit you have (10 percent). Older lines of credit are viewed more favorably, and lenders view new accounts as an indicator that you have cashflow problems.

The best way to keep your credit score healthy is to simply make payments above the minimum required on time, every time, and avoid having too many accounts at once.