Having a good credit score! Perhaps you have seen it on television. It’s called the FICO score, and the warm and friendly customer support representative is stating the importance of this score. For several years, this score has been a way for lenders to measure whether or not an individual is credit-worthy for personal installment loans.
Take for example, Brett, who has been maintaining a good FICO score and constantly checking it out through tools that easily connect to credit bureaus every time a credit inquiry is made. Sites like Experian has allowed him to go through his credit reports and alerts from the comfort of his mobile phone. Brett is no stranger to financial setbacks. He has already experienced one bankruptcy and doesn’t want to take any more chances. The application on his mobile tells him what may go wrong if he is careless – step by step – and what he needs to do in order to maintain or improve his score.
Our financial health needs routine maintenance just like our health to work well. A good credit score is a basis for where you stand when it comes to money. It is not a random number set in stone or created by your credit card company, but rather a carefully thought-out figure after taking many factors into consideration.
Benefits of good credit score
A good credit score can lead you to financial success. It is a compilation of information gathered from your lender that will let you obtain a loan, get a job, or qualify as a preferred customer. A teen who buys his or her first car will probably need to borrow money. Without a good credit history, a bank may decide not to give the loan or deny the application right away. This happens very often, even if the individual is capable of repayment or has adequate wages to pay them. In essence, a good credit score is a must for mortgage loans with a lower interest rate. It is necessary for car loans with zero down payments. A good credit score plays a major role in determining your financial responsibility as an employee of a company.
Different ways to boost your score
So what can be done to boost your credit score? A lot. The first step, however, is to establish a score if you don’t have one. The easiest way is to open a checking or savings account in a bank. Once the account is set up and bills are paid on time, your credit score will take off. As time passes by, you will get the knowledge and information on what is working for and against your credit score. We know that prevention is the best way to care for financial health. Things like not maxing out your credit limit will increase your score. Paying bills before the due date, using various types of credits, holding the account for a longer period, will all contribute to the score increase. There are many credit types to choose from that will be to your advantage in boosting your score, such as store-issued credit cards and secured loans.
Another possibility with establishing good credit is seeking the help of a cosigner. For instance, young adults can request their parents to cosign for the new vehicle they are purchasing. This will guarantee payment in the event the individual cannot meet loan obligations. If the terms of the loans are satisfied, the borrower will have the opportunity to start the process of establishing a good credit history.
Things that will bring down the score
Many instances such as not paying bills on time, default loans, and bankruptcy will have an adverse effect on your credit score. Applying for credit cards unnecessarily or just for the sake of a cash back bonus will further ruin your score. Not paying attention to the mounting interest charge on an unpaid bill will shoo away any potential lender. The credit report agencies will keep your record for a period of seven years, unless the state laws say otherwise. This may make it difficult for you to obtain mortgage or credit in the future if your score is suffering. You cannot change your credit history. The best fix you can do, however, is to have a disciplined budget and make an effort to negotiate any outstanding debts.
Keep working on your score and be smart. Eventually, you will see that score go up and up. You will then have more power to make good financial decisions.