Why Is Your Credit Score Important And How You Can Improve It

A credit score is a report about your creditworthiness that different financial institutions are using nowadays. This one is most commonly used in the United States and in Canada, where having a good credit score is of highest importance to some.why your credit score is important and how to improve your credit score

Why Is Your Credit Score Important?

Having a good credit score has a lot of benefits, especially if you’re looking to get a loan. Lending companies usually give lower interest rates to individual’s that has a good credit score as oppose to those who have a bad one. Having a score over 700 is considered as a good credit score, so if you want to get better interest rates, then aim to get that.

This is also the case if you’re trying to apply for a new credit card, insurance, or even for a job. Your employer may check your credit just to know if you’re responsible enough, so try to maintain your credit score in good standards every time.

Some Things You Can Do To Improve Your Credit Score
  • Pay off your balance
    If you have too much outstanding balance and you want to have a better credit score, then it’s probably the best time to start paying them off now. Your score will be affected by this if you don’t pay for it and that effect could be a bad one. Try to talk with those companies that you owe and maybe you could negotiate a lower interest rate, so that you could pay them off much faster.
  • Pay bills on time
    Another thing that lending companies look at is how long you pay your debts off and if you are paying them on time. If you are paying your bills on time and haven’t missed a payment for a long time, then that would have a positive effect on your credit score.
  • Use your card/s responsibly
    Remember that your credit score measures your creditworthiness and how responsible you are. Getting yourself near the credit limit and not paying your credit card bills on time can tell how irresponsible you are and that’s what lending companies are wary of. Before making a big purchase, try to think about it for a while and determine if it’s really worth spending for. You don’t want to accumulate a balance that you couldn’t afford to pay for, right?
  • Have a long account history
    Your score will not improve overnight, so you must take it step by step. Try to pay off all your debt, and if you finished that of, start using your credit responsibly and always pay on time. You’ll be shocked on how your credit score will improved after a year or two.
Other tips:
  • Don’t open too many accounts in just a short time period
  • Don’t close your accounts just to improve your credit score
  • Check your credit score monthly or every two months
  • Keep your cards active

Having a good credit score means you’re a good investment, if you ever decide to get a loan, and that you’re managing your finances properly. It’s also a sign that you have a good financial life. I hope those tips can help you improve your credit score and your finances as well.

Other articles about credit scores:

The Cost Of A Bad Credit ScoreFrugal Rules

5 Reason Why Having A Good Credit Score Is ImportantSquirrelers

How To Raise Your Credit ScoreDebt Roundup

Build Your Credit In CollegeModest Money

Photo Courtesy of  401(K) 2013
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Hello! My name is Mark and I'm the one responsible for this website. I'm just a person with enough knowledge about finance-related stuffs. You can know more about me by liking my Facebook Page, following me on Twitter or by adding me in one of your circles on Google+.

Comments

  1. You can go a long way with a good credit score. Many think it is just for the ability to borrow, but that it no longer true. Thanks for mentioning my article.

  2. I think the best credit score is NO score. It’s not wise to live your life preparing for debt. If you are smart enough with the money and SAVE as you should, your life might actually go without any debt.

    Anyway, if you’d need some score for a mortgage (which is the ONLY debt I’d accept anymore, though I don’t think I’d accept it anyway), these tips surely help out. But don’t rely on credit, don’t plan on getting loans. If you save and invest wisely, you might never need a credit score 🙂

    • I agree with not planning to live a life with debt, but your credit score factors into many more areas of life than just getting loans. Currently, insurance companies look at your credit score. They tie a high credit score to safe drivers, meaning a lower premium. Also, employers look at prospective job applicant’s credit score. Again, a high credit score assumes a reliable, worker. So regardless what your intent is, having good credit is paramount.

  3. Credit is so important. One thing that I would mention is that you have to have debt at some point to have good credit. It’s a shame, but it’s true. Thanks for the great read!

  4. Your credit score is like your lifeline. I like your tips on how to improve it.

  5. A good credit score is imperative if you ever want a mortgage. The interest rate you receive (good or bad) is based on your credit score. Obviously the lower the rate the better (and the more money you save).

  6. It is amazing how many people don’t know about such an important part of their financial life. Knowing how to improve (or at least not ruin) your credit score is vital

  7. I was searching about mutual funds when I found this site. Great post here. This is what I always believe that “our credit line is our life line” so take care of it. Your life will depend on it. Be a good debtor and money will just come easy when you need it.

  8. Ideally we all want to live debt-free but this is not always the case. Learning how to make it work to our advantage is indeed important. This is a great read! Thanks.

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