The information used to calculate your credit score comes entirely from the information in your credit report. Credit scores indicate to lenders how likely it is that you will fail to make payments in the next two to three years. Scores range from 300 to 850, with 850 being the best.
Over 720: Will qualify for most offers of credit at the best rates
680-720: Will qualify for most offers of credit at good rates
620-680: Will qualify for some offers of credit at higher rates
580-620: Will qualify for very few offers of credit at very high rates
Below 580: Consumer beware! Will qualify for virtually NO credit offers. If an offer is extended, the interest rates will be extremely high.
IMPORTANT FACTORS TO HELP RAISE YOUR CREDIT SCORE
- Make Payments On time. Every time.
Payment history is the most important fact affecting your credit score. On-time payments boost your score. Late payments lower it. Late payments can stay on your report for up to seven (7) years, although their negative effects will lessen over time.
Important Tip! If you can’t avoid missing a payment, it’s imperative that you make a double payment the following month. WHY? Because all of your subsequent payments will show as late until you make up the missing amount. The more late payments on your credit report, the more your score will fall!
Example: You have a Visa Card with a $50.00 monthly payment. You miss your payment in January but make a $50 on-time payment for February, March, April and June. Your credit report will show SIX late payments – not one! You would have to make a $100 payment in February to be current on your account.
- Have a Variety of Accounts
Having different types of credit accounts, such as credit cards and loans, can help your credit score. This will show that you are able to manage different interest rates and payments over the course of time.
- Don’t Close Out Older Accounts.
It may be tempting to close out credit accounts that you no longer use. Believe it or not, closing accounts will lower your credit score. A portion of your credit score is made of up of all of the accounts you have had over time. It shows creditors that you are creditworthy. By closing an older account, the length of your credit in years deceases and takes your score with it.
- Avoid negative public records and collections.
Bankruptcies, judgments and collection items have a big impact and lower your score significantly.
A collection record may be added if you fail to pay any creditor including a utility or cell phone company, medical facility, etc. If the company is unable to collect, they will turn your debt over to a collection agency.
Collections can stay on your credit report up to seven years. Bankruptcies can stay on your credit report up to ten years.
- Don’t take your credit to the limit!
Even if you have a higher limit, you should not take it to the limit. A good rule of thumb is not to carry a balance that is over 30% of your total credit limit. For example, if your limit is $1,000, you should attempt to keep your balance around $300 or less.
An even better option: If you don’t have the money to pay off the bill at the end of the month, then revisit your spending habits.
- Keep your credit clean.
Be patient. A long history of good credit does make a difference. While it may take years of good credit management to see the results, it will be worth it in the long run.
Important Tips to Raise your Credit Score!
*A mix of good credit will help boost your score. This means having a reasonable combination of auto loans, home loans and credit cards.
*Avoid new HARD inquiries – Don’t take out new credit unless you need it!
*Avoid high interest rate credit cards. Check the fine print before you sign up for a new credit card.
*Credit repair companies charge a fee to fix your credit. Legitimate credit repair companies can help you remove inaccurate information from your credit report. But why pay a company to do this when you can do this on your own for FREE. Just contact the credit bureaus yourself and save your money!
*And lastly, checking your own credit score does NOT impact your credit at all. Remember to get your FREE report once a year from each of the credit bureaus.
TransUnion 1-800-680-7289 TransUnion.com
Experian 1-888-397-3742 Experian.com
Equifax 1-888-766-0008 Equifax.com
