If your credit score is not so great, it can cause many headaches for you. Having a low credit score means you might not be able to take out a loan when you need to, or if you do manage to take out a loan, your interest rate will be through the roof. A low credit score can even affect how much you pay for things like auto insurance. So what exactly is a credit score and how can you improve it?
Credit Scores
A credit score is a 3-digit number that gets generated using the financial information in your credit report. One of the most widely used types of credit scores is called the FICO score. This number ranges from 300 to 850 and uses data from your credit report in these five categories:
If your credit score is 350 to 650, it's considered poor. If it's 650-690, it's considered problematic. If your credit score falls between either of these ranges, here are three ways you can improve it.
Get Rid of Errors on Your Report
One of the first things you should do when trying to improve your credit score is to request a free credit report. Go over the report very carefully and look for any errors. Twenty percent of Americans have found mistakes on their credit report. For 5% of them, it led to having to pay more for things like insurance and loans. If you find a mistake, dispute it and get it removed as quickly as possible.
Pay Your Bills on Time
Your payment history is one of the categories that affects your credit score the most. Because of this, one of the easiest ways to improve your credit is to start paying your bills on time. If you have several bills that are due each month, simply write the due date on a calendar and be sure to mail it out in plenty of time so that it doesn't arrive late. If you pay your bills online, simply sign up for auto pay. Some creditors might even allow you to adjust the due date.
Pay Down Credit Card Balance
If you have almost maxed out on your credit cards, paying them down can greatly improve your credit score. The farther away you are from your credit limit, the better it will be for your credit score.
Visit a website like http://www.unitedsecurityagency.com for more help.
Share19 June 2017
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