Factors That Affect Credit Score, How to Improve It
Factors That Affect Credit Score, How to Improve It
If you are planning to purchase something and your interest rates matter, then knowing your credit score is very important. If you have good credit score, then you might be charged a lower interest rate. On the other hand, if you have bad credit score, then you will more likely be charged a higher interest rate.
Your good credit score indicates you pay bills on time and can handle money wisely. As a result, the lender will think that you will be responsible in paying the loan and you might be asked to pay for a lower interest rate.
However, your bad credit score indicates you make overdue payments, or not at all, and you are careless in handling money. Consequently, the lender will be doubtful of your payment ability and you will more likely be asked to pay for a higher interest rate in order to compensate for the risk.
Paying your bills on time will certainly increase your credit score. Your credit score is one of the most significant information in your credit report.
Another factor that affects your credit score is your total number of loans in relation to your credit limit. For instance, if your loans almost near your limit, then your credit score will be lower.
The best approach to improve your credit score is to make on time payments. Do whatever it takes to pay your bills on time and make it your first priority. It will eventually increase your credit score and in turn, you might be charged a lower interest rate.
Do not believe credit repair scams who force you to pay immediately and promise they will increase your credit score and remove negative information in your credit report. In fact, negative information cannot be removed if it is correct. Otherwise, only you can correct the negative information.
You can request for your free credit report annually from the three credit reporting bureaus, Equifax, Experian, and TransUnion. If someone asks if you want your credit score, you will be charged $10 or $15 if you say yes.
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Filed under: Credit • Credit Score • line of credit • Loans
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