How Much do You Really Know about Your Credit Score?
April 3rd, 2008 | Published in Money
None of us like to think that our trustworthiness is determined based upon an unusual number that’s calculated by giant agencies that track buying and payment habits. Unfortunately, it’s true. If you want to buy something, rent a Phoenix apartment or even turn on a cell phone, your credit score is going to matter.
What is a Credit Score?
Your credit score is based upon a number of factors and ranges between 300 and 850. The higher the number, the better. The most important weight that goes into giving you your unique score is the amount of debt you have and the habits you’ve made in regard to payments.
If you have a reasonable amount of debt and make payments on time all the time, your credit score should be high. If you have never incurred debt, your score will be low. If you happen to have wracked up a ton of debt and ran into problems with the repayments, your score just might be awful.
What Affects Your Credit Score?
So, what can impact your credit score for the worse and for the better? Let’s take a look!Beyond poor payment history, there are other things that can negatively impact your overall credit score and credit worthiness. They include:
- Poor debt to income ratio
- Late payments
- Too many credit inquiries
Credit inquiries happen when potential creditors check your score. This can happen legitimately when you’re:
- Leasing a Phoenix apartment
- Buying a car
- Applying for a any kind of Loan
- Signing a cell phone contract
- Applying for a new credit card
- Applying for certain jobs
How to Improve Your Credit
There are plenty of things you can do to improve your credit, even if it’s horrible. Some of the smartest ways to make credit repair happen include:
Pulling your own credit report – This is an important step to make sure you understand everything that is counting against you. There might even be errors on the report. Examine it closely and report false items and make efforts to pay off debts that have been around for a while. Think about checking your credit online at a few of the following websites:
Improving debt to income ratio – One of the best ways to improve credit scores and repair credit at the same time is to decrease the outflow of cash in your budget. Pay off bills and close out unnecessary accounts. The more money you have versus your debts, the better. Check out MSN Money’s quick Debt to Income Ratio Calculator to decide where you may need to cut back.
Understanding your credit report and how to go about handling credit repair can help you immensely down the road. The better your credit is, the more likely you are to be able to enjoy the life you desire.