Your credit score is the number that helps lenders decide whether to give you a loan and it also might determine the interest rate you will be charged on it. Credit scores variate from 300 to 850. Less when 500 is disastrous, 600-700 is good, more when 750 – excellent.
According to FICO report about twenty present of Americans have credit score less than 600.
Your credit score affects your credits’ interest rates. The higher the score, lower the rate. But not only interest rates are in question. The score may influence your car insurance rate, your job application, your medical and life insurance, mortgage etc.
Americans are shockingly financially uneducated. 63% of citizens don’t know the terms of their loans. Most of them have never heard of credit scores and definitely don’t know their own score.
Meanwhile, bad credit score can hinder your financial prosperity in many ways:
- If you have an immediate cash problem, bad credit score might impede you to attain payday loan.
- Your credit cards will have higher interest rates.
- Every time you need a loan or insurance, you will pay more on interest.
- Often employers check the credit scores of their prospective employees before making a decision.
- Landlords and utility companies check credit scores of their prospective tenants, too
Arguments for knowing more about credit ratings are very strong, so let us begin.
1.Checking one’s credit report once a year is essential.
A credit report is based on personal information such as a borrower’s name and address, date of birth, individual taxpayer number and credit history state. On Annualcreditreport.com you can check your credit report based on three TOP credit bureaus’ results. Be careful! Only that official website contains real and verified information.
2 . Your credit report may contain mistakes. Review it carefully.
It is possible that a credit report might contain mistakes that will affect a person’s credit rating. One of five Americans generally find mistakes in their reports and have to dispute them. This little effort can improve your credit score, so, it makes sense to check your report from time to time.
Most popular reason for mistakes in reports is identity theft. In 2017 about 15.5 million of Americans had their identity information stolen.
If you have found an error, contact one of credit reporting companies with dispute letter.
3. Use legitimate credit score repair services to improve your credit rating.
On Better Business Bureau website you can find lots of legitimate companies that specialize in credit score repair. With their help you will can achieve better results with minimum timing and effort.
Pay your credit card loan and close additional credit cards to improve your score even faster.
FICO report says that the most powerful way to influence one’s credit rating is to close all credit card debts. 30% of credit score calculations depend on such type of loans because it very easy to get money with a credit card but not so easy to return total amount with high interest.
4. Keep your payments in order
35% of credit ratings are affected by customer payment discipline. Pay all your bills in time, not only credit card ones. Turn on automatic payments on your current account. If you forget to pay, try not to be late more than 3 or 5 days.
5. Never take payday loans or similar short-time loans.
If your credit rating is low you might feel tempted to take a payday loan. Notwithstanding the fact that this type of credit is designed to be paid from the nearest paycheck, 80% of payday loans are not paid on due time. Thus, in order not to be trapped in a debt circle, read about Community Development Credit Union, a non-profit organization that provides fairly priced loans to people with imperfect credit history.