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Tips on How to Improve Your Credit Score

Answering the credit score questions Your credit rating can affect many of the important financial decisions in your life. It can be a factor in everything from interest rates to opening a bank account to a job application. Here are some answers to the most frequently asked credit What is a credit score? Most people have a credit score. A credit score is a number determined by a credit bureau that helps lenders assess how well you've managed your financial obligations. It's based on your behaviors and determines eligibility for things like credit cards, home loans and more. What makes up a credit score? While there is no single formula that determines a credit score, here are some categories and their relative importance that are considered when establishing a score. PAYMENT HISTORY TOTAL AMOUNT OWED LENGTH CREDIT HISTORY Consistency of making Includes the ratio of what you owe to How long you have been payments on time. the amount of credit that's available. using credit. 35% 30% 15% 10% 10% TYPES OF CREDIT IN USE NEW CREDIT ACCOUNTS AND INQUIRIES Your outstanding credit accounts including credit Accounts you've recently opened and cards, installment loans, mortgages and others. inquiries from creditors. SOURCE: What do the numbers mean? Most credit scores rank individuals on a scale from 350 - 850. The higher the score, the less you are seen as a financial risk to creditors, prospective employers and landlords. 300 350 400 450 500 550 600 650 700 750 800 850 VERY POOR POOR FAIR GOOD GREAT EXCEL. 692 NATIONAL AVERAGE VERY POOR (BELOW 499) GOOD (680- 729) POOR (500 – 579) GREAT (730 - 799) FAIR (580 – 679) EXCELLENT (800+) SOURCE: How can I affect my credit score? There are a number of ways to improve and hurt your credit score. Remember these tips when it comes to dealing with your finances. IMPROVE YOUR SCORE HURT YOUR SCORE Consistently pay bills on time. Fail to make even the monthly minimum payments on credit Pay monthly balances in full. cards and loans. Check your credit report regularly for accuracy. Exceed your account limits. If you choose to borrow, try to keep File for bankruptcy or get your your account balance around or below 50% of your credit limit. account turned over to a collection agency. Apply for a lot of credit. How do credit cards relate to my score? Responsibly using credit cards is an easy way to help improve your credit score. Here are a few tips to help build your overall credit score and prevent you from developing bad financial habits. Use them regularly Manage them properly Using your card every so often Excluding mortgage or rent, keeps it active, which shows keep your monthly debt payments at less than 20 percent of your monthly income. lenders that you can handle credit and ultimately helps build your score. Keep them low Pay them monthly Keep your balances below 50% Even if you can't pay them off of the approved credit limit. 20 Avoid using the full amount of your available credit. completely, you must pay the minimum monthly payment. If possible, try to pay more than just the minimum. Who cares about my credit score? Well, lots of people actually. Your credit score matters if you want to: Take out a loan Apply for a Rent buy Apply for a job Get insurance Purchase cars, credit card a home large appliances, or cell phones Where can I get my credit report? There are three major credit bureaus that produce reports. You can receive one free report annually at or by calling 1.877.322.8228. EQUIFAX Experian TransUnion. Bank of America

Tips on How to Improve Your Credit Score

shared by eromero on Nov 09
Learn about your credit rating and how to improve your credit score with detailed information and tips provided by Bank of America.


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