5-Minute Guide to Your Credit Score
Posted on 2016-03-09 08:00:48
How much do you know about credit scores? Do you know the main factors that can affect your credit score? Our 5-minute guide to your credit score will help you understand your credit score and put you on track for a better credit score.
1. Pay Bills On Time
How you pay your bills has a huge impact on your credit score. Paying your bills on time every month is the quickest way to see your credit score go up. That doesn’t mean the bills have to be paid in full, but make sure the minimum payment due is paid on time. If your bills are coming at an inconvenient time of month, ask your creditor if the closing date can be changed. Many will do this for you.
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2. Pay Down Balances
While you are only required to make a minimum payment each month, lowering your balances can help raise your credit score. Make it your goal not to exceed using 30% of your available credit. Consider using a budget so you can see where your money is going.
3. Don’t Apply for New Credit You Don’t Need
Retailers are notorious for offering on-the-spot rewards if you will only sign up for their credit card. There are several reasons to say No. When you apply for credit, it is recorded as a hard inquiry on your credit report. The number of hard inquiries on your credit report can affect your credit score. Also, some people will tend to spend more when more credit is available.
When you need to shop for a home, car or student loan, do your shopping within a short amount of time. Most credit score models will count multiple inquiries for these types of loans as a single inquiry if they are made within a 14-day period.
4. Spend Less
Studies show that those with the highest credit scores tend to use very little credit. People tend to spend 12% to 18% more when paying with plastic instead of cash. For some consumers, that begins a downward spiral of getting in too deep to make on-time payments.
5. Keep Tabs on Your Credit Report
The information on your credit report is used to calculate your credit score. The information provided to the credit bureaus by your creditors is outside of your control. Make sure your credit report is accurate. The sooner an error is discovered, the quicker it can be corrected.
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