Taking Charge of Your Credit Score
- Good credit is critical. Unfortunately, it’s pretty easy to hurt your credit score. Something as simple as being late on a loan payment can do serious damage to your score.
- The good news is that you can repair your credit and raise your credit score. Andyou don’t need to hire a company to fix your credit. You can do it on your own.
- It’s important to remember that repairing your credit score is a processthat takes time. Don’t get discouraged if things don’t turn around right away. Keep at it because in the end, it will be worth it.
Understanding Your Credit Score
There are a number of specific things that affect your overall credit score. If you don’t pay attention to all of them, you can unknowingly hurt your score. Your credit score will range between 300 to 850 and represents how likely you are to pay back money you have borrowed.
There are five factors that determine your score. In order of importance, they are:
1) Payment history. Paying bills on time is really important for your overall credit score.
2) Credit usage. Credit usage is how much of your available credit you’ve used. A low credit utilization rate is better for your credit score.
3) Credit mix. Typically, it’s better to have experience with different types of credit than with just a single category.
4) Age of accounts. Generally speaking, the longer you’ve had credit, the higher your score.
5) Credit applications. When someone examines your credit record to determine whether to give you credit, it’s called a “hard inquiry”, and too many hard inquiries can lower your score.