Improve Your Credit Score
Credit score - the holy grail! It determines a lot of “can” and “cannot” in your life, including whether or not you can buy a house. I mean, unless you’re some sort of tycoon who can pay cash for everything, you might want to pay attention to your 3 digit number.
But, what should you look out for? For starters, understand the credit score scale and find out where you stand. Credit scores range from 300 - 850 - You can imagine the higher the number, the better. Then go online and pull your credit score. Most often you can pull your credit score online for free through your bank or credit card by logging on to your online account. You are also entitled to a free copy of your credit reports every 12 months from each of the three nationwide credit bureaus by visiting www.annualcreditreport.com.
Here’s a general credit score scale:
300 - 629 - “Bad” : You’re not in the best shape and most lenders (from credit cards to loans) will view you as “high risk” — aka, in their mind: likely to default on your payments. They will most often decline your request to borrow money.
630 - 689 - “Fair” : Within this range, lenders may work with you, but you’ll have limited options and can expect to be charged a higher interest rate to borrow money.
690 - 719 - “Good” : You’ve now got a lot more options with better interest rates.
720 - 850: - “Excellent” : A new world of opportunities with the best interest rates available.
So, you’ve done some homework and looked up your score, how can you improve or maintain it? Well, here’s a couple of ways how:
Pay those bills ON TIME! (Pro Tip: You can ask creditors to move your due date to align with payday and/or make it easier to remember when to pay your bills)
When charging things to your credit card(s), ideally, you shouldn't use more than 30% of your credit limit. If you use more, you should try to pay your bills more often.
Over time, as your credit score gets better, and you build more history with a credit card, and/or as you get promotions at work, you can call your credit card company and try to increase your credit limit.
Don't close accounts unless you have to. Tip: Stick to the power of 2: 2 cards open for at least 2 years.
Check your credit report for any errors. You can dispute any items that are incorrect or missing that might be affecting your score.
Sum it up
A good score can open a world of loan opportunities and borrowing money gets cheaper the better your score is. So, check your score regularly and come up with a solid plan to repair it by following some of the key items discussed above.