Keeping a great, or at least decent credit score is an important aspect of financial discipline. If you manage to achieve this, your ability borrow money will be significantly enhanced, which may come in handy in a number of ways. If you’re worried about your credit score, the best time to take action is right away, and this article will provide some useful tips.
To begin with, you must understand how your credit score works. The FICO Scoring system is widely used in evaluating credit –worthiness. It ranges from 300-850, and the higher the number, the better your chances with potential lenders and vice versa. Below is the FICO Score scale:
- 300-579 Poor
- 580-669 Fair
- 670-739 Good
- 740-799 Very good
- 800-850 Excellent
For most lenders, a good credit score is a FICO Score of 700 and above. Less than will most likely land you unfavourable and undesirable deals with high interests rates which will likely plunge you into more debt.
4 Steps to Keeping a Great Credit Score:
Understand how the scoring system works.
Knowing how the FICO scoring works and how credit bureaus arrive at the scores will help to guide you in your financial dealings so that you build on it rather than do anything that would decrease your score.
Outstanding loans and lines of credit affect your credit score negatively. Try as much as possible to clear or lower all debts to maintain a good credit score. Sometimes you can’t avoid taking on some debt, but you might want to consider using alternative sources that will not have an impact on your credit score. Car title loans are an excellent alternative to conventional loans since they do not impact your credit score. With a car title loan, you will provide the title on your car as collateral in exchange for an amount usually worth between 25% and 50% of the total value of the car. Here’s how to do car title loans Winter Park and how to implement it for free.
Timely payment of bills.
This alone takes up to about 35% of the scores. These include your credit card bills, mortgage, car loan, etc. avoid late payments and not paying altogether. This could end up in the collection agencies and negatively affect your credit score.
Maintain low balances on your card(s)
A high credit card balance translates to a bad credit score. The cumulative balance of all your credit cards should be within 30% or less of credit card limits. Credit limits are simply the highest outstanding balance you can have on your credit card without being penalized for it. Using more than 30% will put your credit score at risk.
In conclusion, these are not all the tips, but they are a starting point to your journey to better deals. Consistently adhering to these guidelines will yield you good results and lead you to a healthy financial status. However, you must be patient as some of these require time and commitment to implement.