A credit score is a three-digit number that can make or break your ability to get credit. This numerical expression is determined after the statistical analysis of an individual’s credit files. Typically, the credit information used to come up with a person’s creditworthiness is based on credit reports gathered from credit bureaus. Getting high credit scores is an important way of ensuring your financial success. Maintaining your credit score is even more important. Credit scores range from 300 points to 850 with 300 being the poorest level and 850 the most excellent score. A good credit score will enable you to enjoy low interest rates on loans as well as save you money on insurance and utility services.
The following tips provide valuable insight on how to keep your good credit score strong:
Check Your Credit Report Occasionally
To maintain a good credit score, you must first know its current status. It is important to understand what is reported on your credit score. As a consumer, you are entitled to get annual credit reports from three major bureaus. These reports will provide an update on how your credit scores are faring. Errors detected on the reports should be reported and corrected immediately to prevent any negative impact on your credit standing.
Set Credit Payment Reminders
One of the greatest enemies you will encounter in building your credit scores is defaulting on your credit payments. Credit balances should be paid during the stipulated period and not a day after. To ensure that you always pay on a timely basis, you can set up systemto remind you when the paymentdue date draws near. Most banks have online banking portals through which reminders can be send to you in form of text messages or emails. Another great method of payment is simply to have your payments debited directly from your bank account each month. Payment is then remitted electronically and your payment is made without the hassle or delay of writing a check and mailing it in.
Cut Your Debt Down
Keep the level of your debt on the minimum side. It is next to impossible to maintain a high credit score if you have overwhelming debt. Your credit reports give you information on how much you owe on your various accounts as well as the interest rates charged on each. From this you can make a debt payment plan and start paying your debts off, one by one. Startpaying extra on the highest interest rate credit cardand pay it off first. Then progress to the card with the next highest interest rate, etc. until they have all been paid in full.
When being gauged for creditworthiness, your past behavior and payment habits are taken into account. Even if you make a lot of money, it is imperative to maintain both a timely and consistent record of payment.
Unfortunately, sometimes events beyond your control can put a blemish on your otherwise good credit scores. The following points discuss the different approaches on how to nurse your records back to health and improve credit scores:
Pay Off Past Balances
To be safe, you have to maintain a 30% minimum balance on your payments. The history of your payments accounts for approximately 35% of your total credit score. This means that the longer you delay your payments, the more your score suffers. Paying your debts before they are reported to a collection agency ensures that you do not get any missed- payment reports. If you have an emergency situation and simply cannot make your payment, call the company immediately and explain your situation. Although there are no promises, some companies do have some flexibility to work with you in this situation. Even if the company cannot readjust your payment schedule, it is to your benefit that they know your situation and can note it in your account.
Do Not Apply For New Credit Cards
When you have been knocked down, the best move is to get up and concentrate on recovery. A credit repair mode is when you are trying to improve your credit scores. Getting more credit cards will further hurt your credit score. Your credit worthiness is reached through a check of all your credit cards, old and new. Adding a credit card will most likely lower your average credit level.
Follow Up on Credit Report Errors
Occasionally, some type of error may have caused a blemish on your credit score. Your payments could have been reported as having been made late even though you paid them on time. If you are wrongfully denied points, this can make a big difference on your average score. Exercise your right to remove such reports by writing a letter to your creditors and to the credit bureaus to explain this situation and request immediate correction and removal.
Your credit score can either be a financial asset or an unwanted burden. Keep it working in your favor by monitoring its status, immediately correcting and reporting any errors, and by avoiding accumulation of unwanted debt. For more information on this matter and other sound financial strategies, contact the professional team at Wilks CPA.
Don’t Hesitate! Call Andy Wilks CPA at (405) 670-3150 today!