Credit checks can scare a lot of people, but there’s no need to be scared. Once you look into it more you will realize that credit scores are very straightforward and it is easy to make little changes in your life to rebuild your credit if you need to. Take a deep breath, relax and let’s talk about your credit score.
WHAT IS A CREDIT SCORE?
Your credit score is just a number that represents the likelihood that you will pay your bills on time. Credit scores are calculated by taking a few different things into consideration:
- The amount of debt that you have
- Your payment history
- The length of your credit history
WHAT CREDIT SCORE IS CONSIDERED GOOD?
Credit scores fall within the range of 300 – 850, the higher your score the better! Take a look at the chart below to see if you need to make improvements or not:
|Below 600||We need to make some changes!|
|600 – 650||Better, but still room for improvement|
|651 – 739||You’re doing good|
|740 – 799||Look at you go!|
|800 – 850||Incredible!|
HOW DO YOU IMPROVE YOUR CREDIT SCORE?
You may be in a position where you need to do some work on your credit score and that’s okay! Your credit score is very much so repairable if you make a couple simple changes to your financial habits. Follow these tips to boost your credit score:
Keep the balances on your credit cards at less than 50% of the card limit. Just because the credit is available to you does not always mean you should use it. Avoid maxing out those credit cards! If you hit 50% of your credit limit, pay off the balance before continuing to spend on the card!
Try to avoid doing any credit inquiries while you are trying to improve your credit score. For example; it would be a bad idea to apply for financing a new vehicle. Lenders pulling your credit score can have a negative impact on your score.
Pay your bills well in advance! You don’t want to risk missing a payment which would definitely have a negative effect on your credit. The further in advance you can pay them the better, don’t leave it until the day it’s due.
Little changes will add up and over time will make a big difference. As long as you can make adjustments, stay the path and focus on your goal of homeownership, you will get there sooner than you think.