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 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.
- 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 Score – Frugal Rules
5 Reason Why Having A Good Credit Score Is Important – Squirrelers
How To Raise Your Credit Score – Debt Roundup
Build Your Credit In College – Modest Money
Photo Courtesy of 401(K) 2013