The credit score you have is the most important thing to your financial future. If you don't take care of it, then you may not be able to get a mortgage or buy a car without paying sky-high interest rates.
How do you improve your credit score? It's easier than you think! You can start by checking your free annual credit report from each of the three major reporting bureaus and correcting any errors that might exist on them.
Next, make sure all of your accounts are up-to-date with payments and close out any accounts that are no longer needed for trade lines but still show as open and active. This will help lower the amount of debt on your report which in turn helps increase your score.
Why Is a Good Credit Score Important?
A good credit score is important because it can save you money. The lower your credit score, the more likely you are to pay higher interest rates for loans or other forms of financing. You may also be denied a loan altogether if your score is too low. This means that it's worth taking time to raise your credit score even by just a few points so that you can start saving money on loans and other sources of financing sooner rather than later.
Tips Boosting Your Score Is Easy
If you want to boost your credit score, there are a number of steps you can take.
1) Pay your bills on time every month. This is the most important factor in determining your credit score and accounts for 35% of it.
2) Keep balances below 30% of the limits on revolving credit cards, such as American Express or Mastercard, which account for 10% of the score.
3) Don't open up new lines of credit unless absolutely necessary (e.g., car loans). Opening too many lines will lead to confusion about what you owe and who owes it to you - this messes with 20% of your score!
4) Avoid applying for more than one loan at a time
1. Know Your Score with a Free Credit Report
With credit scores being the most important factor in determining whether or not a person qualifies for loans, mortgages, and other types of financing it is imperative to know your score. Although there are many sites that offer free credit reports, they only provide one piece of the puzzle. Without knowing what factors go into determining your FICO score you won't be able to take full advantage of improving your credit worthiness.
2. Check If Your Report Is Accurate
If you have been denied credit, had your identity stolen, or received a notice from the IRS that you need to pay back taxes, then there's a good chance that your credit report is inaccurate.
The Fair Credit Reporting Act (FCRA) requires all three major reporting agencies – Equifax, Experian and TransUnion – to give consumers access to their reports for free once every 12 months. Consumers can also order one free copy of their report per year directly from each company. The FCRA also prohibits businesses with access to consumer reports from discriminating against applicants based on any information in the reports.
3. Pay Your Bills on Time
Whether you're a new student, recent graduate, or just looking for a better job, it's important to have good credit.
It's no surprise that the number one thing that affects your credit score is paying your bills on time.
Unfortunately, many people don't know how to read their monthly statement and can miss an important payment date by accident. It doesn't matter if you're using checks or automatic payments- anything that makes it difficult for you to look at your account every month could cause problems with your finances down the line.
When you pay late even once in awhile, lenders start considering this as a sign of potential risk and will charge higher interest rates when lending money in the future.
4. Open a Secured Credit Card
This will be about why you should consider opening a secured credit card. Secured cards are designed for people with bad or no credit, and they help establish your credit score by reporting information to the three major credit bureaus: Equifax, TransUnion, and Experian.
A secured card is also a great way to build up your credit if you have something like an emergency fund that can cover all of your expenses in case of an unforeseen event; this means that you won't need to rely on high-interest financing options (like payday loans) when times get tough.
5. Get a Credit-Builder Loan
If you know you have a low credit score, but don't want to wait the 7-10 years for your score to improve on its own, then it's time to consider getting a credit builder loan. A credit builder loan can help those with poor scores establish positive payment history by providing them with an opportunity for repayment.
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