When it comes to your credit score, you can always work to increase it. Today’s world seems to revolve around your credit score. It affects so many parts of your life — your apartment, your employment, your insurance premiums and your ability to borrow money. A good credit score enables you to purchase a home, get a cellular phone, pay less on your interest rates and easily find credit.
Your credit score is also frequently called a FICO score. The score tells lenders what type of borrower you are. If you have a high score, it says that you pay your debts on-time and as promised. A low score says that you are at risk for not paying your debts. FICO scores range between 300 and 850.
Credit scores reportedly focus on the last two-years of your credit report. They will consider all of your information, but the main focus is on the most recent. This gives you the ability to increase your score fairly quickly. Yes, it still can take up to a year to see great results, but they are well worth it.
Your credit score is based upon:
- Payment History — 35%
- Availability of credit and usage — 30%
- Duration of open accounts with creditors — 15%
- Credit inquiries — 10%
- Composition of your credit file (the type of debts you have) — 10%
The good news is that while it takes some time, the steps to improve your credit score are quite simple.
Start will getting a copy of your credit score from each of the three main credit bureaus: Experian, Equifax and TransUnion. Review each report for inaccurate information. Most people will find a mistake on their report at least once in their lifetimes. These mistakes can lower your score and cost you a lot of money in interest, so it is important to make sure your report is accurate.
Once your report is accurate, start paying your bills on time each month. This is the main thing that will raise your score. Late payments will lower your score faster than anything else. You have to pay on time, every time.
Take steps to lower your debt as much as possible. You want to have at least 50% of your credit unused. That means if your have a limit of $20,000 on your credit cards, you don’t want any more than $10,000 charged on them. In fact, lower that as much as you can. The less you owe, the higher your score.
Pay on time and pay off as much as possible. These two methods will help you raise your score easily. Not only will it increase your score, but it will save you lots of money. You won’t have late fees to pay, you will have fewer bills to pay towards debt and you will get better interest rates from lenders. There are many advantages to having good credit, and anyone can have good credit. It just takes a little work and a little time.