Improving Your Credit Score – There a lot on CC, now let’s talk more on how you could possibly improve your Credit Score, know more on who determines your credit score and more. Read on
What is a Credit Score?
First of all, let’s figure out what a Credit Score is. Credit Scores are the records of scores credit card issuers/ borrowers make use of when considering if a loan/ credit should be given to you or not. It helps the lenders in decision making when it comes to giving out cash on Credit.
The Credit Score has got information about you and your credit experiences such as your bill-paying history, the type of account you have and the number. It’s got a record specifying if your bills are paid for on due dates, your collection actions, outstanding debt and also the age of your accounts. With all these records and info, a statistical program compares them all to the loan repayment history of consumers with similar profiles.
Every factor that helps to foretell People that’ll possibly pay back their debts, a credit card scoring system gives awards point. The total number of credit score points will tell how credit worthy a person is, how likely a person will pay his or her loan back and pay at the agreed time. Credit Scores are also used by some insurance companies.
Who Determines Your Credit Score?
There are two main scoring models. Namely,
- FICO Score.
FICO is one of the primary models that determines Credit Scores. FICO uses a foretell analysis by take consumers information and analyzing it. It’s five basically used factors for scoring models are;
- Credit inquiries.
- Total debt.
- Payment history.
- Types of Credit.
- Credit history.
Each of these factors have got their own role to play in individuals credit score. To get a FICO score, you’ll need a specific amount or available credit. FICO has a way of figuring out if a person will be able to repay a loan on time or not.
The VantageScore calculated consumers credit score just as FICO died though it’s got a different procedure. It was developed as a joint venture by Experian, Equifax and TransUnion. VantageScore has six different categories in it’s credit scoring models. They are:
- Payment History.
- Credit Utilization.
- Depth of Credit.
- Total Balance.
- Available Credit.
- Recent Credit.
How to Improve Your Credit Score?
Below are some ways which would help you out in making your credit score better and catchier.
1. Do not Spend More Than You Earn
There’s this adage which says “Cut Your Cloth According to Your Size” and there another one that says “Don’t Bite More Than What You Can Chew” which simply means you shouldn’t exceed your capability. Try not to impress others when you know deep within you, it’s going to affect you and you might even get into deep trouble for it. Try not to spend more than what you earn by creating a budget and making plans on how to spend wisely.
2. Pay Down Credit Card Balance
Try to settle your outstanding debt. You could try drafting out a budget and making possible plans on how you can pay down the pending debts, stick to your plans and avoid procrastination. Know your credit limit and pay your debts bit by bit. Have it in mind that the total amount of available credit has an effect on your score even when you don’t own anything.
3. Do not Apply for a New Credit
Don’t apply for a lot of CC because when that happens, a notification will show on your credit report as a “Hard Inquiry” and if you’ve got a lot of credit cards within the range of two years, it’ll affect your credit score.
3. Check Your Credit Score
It’s preferably to know where you stand so you’ll know how best to handle your spending rate and more. Check out your Credit Score by getting copies of your full credit reports from the three bureaus. They are Experian, Equifax and TransUnion and these reports can be gotten for free once in a year at www.annualcreditreport.com or by putting a call through to other websites that give free credit score check even though the Federal Trade Commission (FCT) was warned against these offers which are deceptive.
The credit ranges from 300- 850. 700 – 740 is good depending on the credit model in use. If that’s your credit score or within, you are qualified for the best credit card and the lowest mortgage rates.
4. Pay On-time
Delay in payment gives you a bad credit score which will affect your history. Avoid delay and pay on the agreed date.
Your credit score history should have a positive change and a lot of improvement as time goes on. It wouldn’t work like magic so have it in mind that the procedures aforementioned will stand as a guide in boasting your credit score leaning you with an amazing and catchy Credit History. Enjoy using Credit Cards.