Credit scores are more than just numbers - it is an important measurement of your financial health. It is viewed by lenders, bank officers, investors, employers and even property managers or landlords. The purpose of your credit score is to provide insight as to how responsible you are when it comes to financial matters - especially debt. It shows if you are honest, disciplined, organized and have a sense of personal responsibility.
Your credit score is based on your credit report. It gets the following details with the respective rank of importance: payment history (35%), debt amount (30%), credit history (15%), new accounts (10%) and types of credit accounts (10%). If you are always late on your payments, you can expect that your credit score will suffer greatly.
What you need to know is that your credit history can improve and you can do it in a matter of months to a year. It will not be an immediate jump to a high score but more of a gradual one. So to make sure that your credit score is in good shape, here are some suggestions that you can implement in your financial life.
If you have a lot of debts, you need to pay them off. Know that the key here is your performance more than the amount. Make sure you send payments on time and you will not default on any of your dues. Remember that payment history and debt amount constitutes to around 65% of the credit score. If you pay your debts diligently, you will increase these two and it will help you with your score immensely.
As you pay off what you currently owe, keep your debt balance low. It will not help your case if you continue to take in more debt. If possible, keep your debt level to zero. If you really have to apply for a loan because you want to buy a house or start a business, make sure that your current debt is low or better yet, non existent.
When you apply and get approval for financial assistance, you need to make sure that you will keep up with your payments. Also, if you don’t have to, try not to close any of your old accounts. The older an account is, the better it will be for your score. However, if you know that having more than one credit card may endanger you to spend them and thus put yourself under a lot of debts, then cut them off and retain only one card. If you are diligent in paying off that card, you can expect that your score will eventually rise.
Taking care of your credit score is a tricky task to accomplish but with practice, you should do just fine. Make sure you check on your credit report regularly so that you can report any discrepancy or unauthorized use of your account - which actually implies that you had been a victim of identity theft.
Your credit score is based on your credit report. It gets the following details with the respective rank of importance: payment history (35%), debt amount (30%), credit history (15%), new accounts (10%) and types of credit accounts (10%). If you are always late on your payments, you can expect that your credit score will suffer greatly.
What you need to know is that your credit history can improve and you can do it in a matter of months to a year. It will not be an immediate jump to a high score but more of a gradual one. So to make sure that your credit score is in good shape, here are some suggestions that you can implement in your financial life.
If you have a lot of debts, you need to pay them off. Know that the key here is your performance more than the amount. Make sure you send payments on time and you will not default on any of your dues. Remember that payment history and debt amount constitutes to around 65% of the credit score. If you pay your debts diligently, you will increase these two and it will help you with your score immensely.
As you pay off what you currently owe, keep your debt balance low. It will not help your case if you continue to take in more debt. If possible, keep your debt level to zero. If you really have to apply for a loan because you want to buy a house or start a business, make sure that your current debt is low or better yet, non existent.
When you apply and get approval for financial assistance, you need to make sure that you will keep up with your payments. Also, if you don’t have to, try not to close any of your old accounts. The older an account is, the better it will be for your score. However, if you know that having more than one credit card may endanger you to spend them and thus put yourself under a lot of debts, then cut them off and retain only one card. If you are diligent in paying off that card, you can expect that your score will eventually rise.
Taking care of your credit score is a tricky task to accomplish but with practice, you should do just fine. Make sure you check on your credit report regularly so that you can report any discrepancy or unauthorized use of your account - which actually implies that you had been a victim of identity theft.
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