The importance of your credit score cannot be overlooked. The problem is that most people do not realize just how important it is until it is too late. When you are young or uneducated on the topic of credit, you may do things that will affect your credit for the long-term and you may not even be aware of it. Your credit score is calculated regularly and can change several times a year, based on the updated information on your credit report at that time. Your credit score can be as low as 300 and as high as 850. What is considered as an acceptable credit score depends on the lender or company considering it, but typically a person with a score of 720 or higher is considered as a low credit risk to lenders. This means if your score is 720 or higher, you are more likely to get approved for loans and lines of credit.
Checking your free credit report gov regularly is always important. This allows you to keep track of any outstanding debts you owe and make sure no one has stolen your identity and is using your name to make purchases or take out loans and lines of credit in your name. Checking your credit rating is easy. You can go online or order your credit report through the mail, usually free of charge. You simply have to enter some basic information to confirm your identity, and there is no hit to your credit when you are checking your own report. To stay on top of your report, it is best to check at least once every six months.
There are many small and large steps you can take to improve your credit rating. Repaying loans and debts on time is one of the most important steps. Even if you are not able to meet the repayment date, work with the debtor to come up with an agreeable payment arrangement, before the debt is sent to a collection agency. At this time, the debt has likely been reported to the credit bureau, meaning it will show up on your credit report and negatively affect your score as a result.
Taking out loans and lines of credit can dramatically improve your credit score, but only if you make your payments on time. Avoid having too many debts at once, not only because this reflects negatively on your credit rating, but also to avoid overcomplicating things for yourself and finding yourself unable to make all of your payments each month. The later you are with your payments and the less willing you are to come to a payment arrangement and get things sorted, the more negatively your credit score is affected and the more you are hurting yourself in the long run. Talking to debt collectors is certainly never thrilling, but is necessary to get your debts dealt with and keep your credit score high.
Credit cards are one of the biggest factors on your credit score. The most important thing to remember with credit cards is to keep a high limit and a low balance. Even if you make your payments before they are due, if you have your credit cards maxed out all the time, this is going to have a negative effect on your rating overall. The general rule is to keep your balance no higher than 10% of your total card limit, to ensure your credit rating stays as high as possible.
The more steps you take toward improving your credit instead of affecting it negatively, the easier it is to get loans and make it farther in life. Keeping an eye on your credit report and continuing to work on improving your credit score is one of the best things you will ever do for yourself and your family. You can also work with a financial adviser or credit expert to get personalized advice and help with improving your credit and keeping your score high.