YOUR CREDIT REPORT AND SCORE: WHY THEY MATTER AND HOW TO IMPROVE THEM
Your credit report is in many ways a big open book about your life. Not only does it contain your history of paying bills, how much you owe, outstanding loans and other debt, it also lists whether you’ve been sued, arrested or filed for bankruptcy.
Your credit report and score are often what determines the interest rate you’ll pay for a loan, or the price you’ll pay for insurance or even whether you’ll be approved for a rental apartment. The three main credit reporting agencies that collect this data are Experian, TransUnion and Equifax, and they look at things such as:
Based on the information they receive, they issue a credit score from 300-850, with the higher number being to your advantage. Because a less-than-stellar credit score can cause you to pay higher rates and more money, it’s good to take a look at where you stand now and make improvements as best you can.
While the dirty details on your credit report may linger for 7-10 years, raising your credit score is a faster process and can really pay off. Follow the steps above, make a commitment to sticking to your budget and you’ll be reaping the rewards of better credit sooner than you think.
Your credit report and score are often what determines the interest rate you’ll pay for a loan, or the price you’ll pay for insurance or even whether you’ll be approved for a rental apartment. The three main credit reporting agencies that collect this data are Experian, TransUnion and Equifax, and they look at things such as:
- Payment history
- How much you owe on credit cards, loans and other debt
- Length of time you’ve had credit
- Applications for new credit accounts
- Types of credit accounts, such as mortgages, car loans, student loans and credit cards
Based on the information they receive, they issue a credit score from 300-850, with the higher number being to your advantage. Because a less-than-stellar credit score can cause you to pay higher rates and more money, it’s good to take a look at where you stand now and make improvements as best you can.
- First, get a copy of your credit report for free at www.annualcreditreport.com. As for your credit score, many credit card companies are offering this free in their monthly statement.
- Look for any mistakes that may be on it. Also, identity theft is unfortunately common place these days, so checking your report and score will let you see if any crooks are using your credit to their advantage. Contact the agency right away to report any discrepancies
- To improve your score, pay your bills and loans on time, without missing even one payment due date
- Don’t apply for more credit than you need or can handle. On the same token, don’t close a credit account that already exists just because you aren’t using it. The agencies like to know you haven’t maxed yourself out
- Pay off your debt and keep your balances low on credit cards
While the dirty details on your credit report may linger for 7-10 years, raising your credit score is a faster process and can really pay off. Follow the steps above, make a commitment to sticking to your budget and you’ll be reaping the rewards of better credit sooner than you think.
