Tips for Improving Your Credit Score
If you are interested in improving your credit score, you must first face the reality of what it is presently. If what you disliked about school was being continually tested and graded, then likely the prospect of receiving your free credit reports and getting your FICO score may feel like getting your test scores all over again.
And like with school grades, if you have unsatisfactory results, you must commit to doing what you can to improve your scores. Indeed, a credit score is a grading system; it’s a number that anyone who deals with you financially can use to evaluate how responsible you are with money. Whenever you apply for credit, be it a new credit card, a personal loan, an auto loan or a mortgage, the potential lender will use your credit score to see how risky — or not — you are as a customer. Prospective employers will also look at your credit report and credit score as a means to evaluate your credit. It is possible to get credit with a less than optimal credit score but expect to pay a higher interest rate.
What is commonly known as the credit score is usually the FICO which will range from the lowest score of 300, to the highest score of 850.
Tracking your credit score isn’t as easy as it should be. By law in the U.S. you can get your credit report for free once a year from each one of the three main credit bureaus. However, getting the credit score will cost a bit, ranging from 8 to 15 dollars each for Equifax, Experian and Trans Union.
When you receive your credit report, check carefully to make sure there are no inaccuracies. This is an important step which should not be overlooked.
Now making the grade with a great credit score isn’t as much about how much money you have as it is about how you take care of your finances, however little or much you make. You may not be able to control how much money you make, but you can certainly control how you spend it. Make your payments on time. Delinquent payments can have a very negative affect on your FICO score. To find out just how extensive the impact, you can use the credit score simulator on MyFICO.com. Even one late payment can significantly lower your credit score. To make sure you don’t miss paying any of your bills on time, consider using online services such as Mint or Quicken or set up email or text reminders.
Make sure you keep your balances low. If you have a $10,000 credit limit, it is not in your best interest to run up your balance close to the limit. The extent to which you have used the credit available to you is indicative of your financial stability. Keeping your balanced under 10 percent or so of the limit can improve your credit score considerably. If you have credit cards you are not using, do not close the accounts as this can hurt your credit score. t shortens your credit history and it also increases your credit utilization ratio.
For more ideas see the video below.
Tips for Improving Your Credit Score