Your credit report is essential in building a strong financial foundation. In the spirit of National Financial Literacy month let’s discuss some things you can do to raise your credit score. The better your credit score, the less you have to pay in interest. Just about every bill you pay is tracked by the three credit bureaus, TransUnion, Equifax, and Experian.
Your credit score is based on a risk measure invented by a company called Fair Isaac and is called your FICO score. This number lets companies know how good or bad a credit risk you are. Your score can range anywhere from 300 to 850. All credit bureaus use this scoring method as a basis to rate you as a good or bad risk.
There are six easy steps to getting and getting your credit score healthy.
Pull Your Credit Report
See what the three bureaus have to say about you. You can to http://www.annualcreditreport.com and order your reports from all three bureaus for free.
Check For Inaccuracies
Given your age, your credit report spans decades of your borrowing activity. It’s no surprise that errors sometimes occur. Some common credit-reporting mistakes include: outdated addresses, closed accounts being shown as open. Misspelled names are common mistakes as well. One last mistake happened to my husband, he had one of his brother’s accounts on his credit report, because they have the same last name and similar social security numbers.
Mend Your Uncreditworthy Ways
Those self-inflicted credit wounds, such as a history of late payments, defaults, or judgments will fade from your record over time. You won’t be able to wipe out accurate information from your credit report, nor can any firm who offers to do so for a fee, no matter what story the spin.
Pay On Time
Now that you have looked at your credit reports and corrected in inaccuracies, make sure to pay everything on time, every time. Also keep your debt level low, compared to credit available.
Credit Card Usage
Remember, a credit card is a credit card, not cash. Even though you may have been deemed worthy by some entity to borrow $50K doesn’t mean you actually have $50k, nor do you need to spend $50K.
Acceptable Level Of Debt
Your debt-to-income ratio is the measure of debt you carry to how much money (after taxes) you have coming in. In the world of lending, it is acceptable to carry 25% of your income in debt.
As you can see, it doesn’t take much work to keep your credit healthy, Just keep your spending under control, pay your bills on time, and don’t apply for extra credit too often.
If you are having trouble with your credit, I am taking appointments for consultations. Feel free to book yours here