What are credit scores for and why are they important?
A credit score is an arbitrary figure that credit bureaus created that go in a file that can be reviewed by financial institutions that can loan you money. Scores range from 300 to 850. Insurance companies or banks are generally the people that look at the scores. They use the scores in order to determine what kind of insurance rate you will pay or what kind of interest rate you pay on a loan. A 700 score or better insures that you will pay the lowest rates available.
How do you find out your credit score?
You can pull up your credit score online for no charge. A Google search will list a variety of sources that will give you a score. Most services will enroll you in a monthly autobill that monitors your score ongoing. This unnecessary and you can cancel anytime after the first month.
What is the best way to raise your score?
Credit scores are determined by a number of factors. Of course paying your bills on time helps a lot. Some negative items are weighted more heavily than others. A late payment of more than 30 days will show as a negative item hence weighing down your score. Late payments of less than 30 days should not effect your credit either way. Late payments do stay on your report for at least 3 years
Whatever you do don’t ever close a credit card account. People make this mistake thinking that once the card is paid off why not close the account since they don’t need it anymore. The credit bureau will actually lower your score if you do this. It is a lot better if you have a lot of cards with a small amount owing on each than one or two cards with a large balance. They would rather you have a lot of credit but not ever use it.
Don’t have a lot of inquiries. An inquiry is when you are shopping for credit such as an auto or furniture loan. Make sure that if shopping for credit to stretch it out for a long period of time, one or two a week at most.
Credit card companies will raise your limit if you ask them. Having higher limits on your cards will raise your score because your overall debt ratio will be lower.
Maintaining a good credit score just requires making intelligent decisions. Always pay your bills when they are due, early if possible. Don’t drive a fancy car if you can’t afford it. Pay more than the required payment on your credit cards each month. If you are looking for a house to buy they always say “dont waste money on more house than you need” buy a sensible home and always put 20% down so you payment is lower and you won’t have PMI insurance.
Do you want more information about repairing your credit score? If so take a peek at this website:raise your credit score Dave Stevens is an expert in teaching others how to repair their credit and is a contributor at Freedom Credit Review
