Maintaining an Excellent Credit Score
A credit score is a three-digit number that can either make life easier or more difficult. The higher the score the better your chances are to get an approval for a loan. The good news is that you can raise your score and enjoy the benefits that come with it.
Author:James PierceReviewer:Alberto ThompsonJan 19, 202210.7K Shares898.2K Views
A credit score is a three-digit number that can either make life easier or more difficult. The higher the score the better your chances are to get an approval for a loan. The good news is that you can raise your score and enjoy the benefits that come with it.
What Is The Score Based On?
The three main credit sources determine your credit score using several factors. Payment history, how you pay your bills, represents the largest percentage standing at 35%. Your outstanding debt, types of credit, utilization, and inquiries represent the remaining 65 %.
What’s A Good Score?
A credit score ranges from 300 to 850. Banks and other lenders consider anything above 700 as good. Higher than this number is excellent. A score lower than 550 is poor. Many people have a middle range of 650, which is fair.
Denied Credit
Unfortunately, a poor credit score will make it harder to get an approval for a loan. While some lenders may still grant a loan, you can expect a higher interest rate. Today, the stakes are higher. Many companies that provide services such as insurance and medical won’t accept you, even if you pay cash. This can make finding a reputable carrier, physician or dentist in Napervillemore difficult.
Stamped A Risk
A poor credit score can also prevent you from renting a property or landing a job. Unfortunately, a lower score translates to lenders that you’re a risk. Utility companies will require a deposit to hook up service and lenders may want a hefty down payment or collateral to approve a loan.
Improving Your Credit Score
The good news is your credit score is not permanent. You can raise your scoresubstantially over time. Unfortunately, it’s not a quick fix. It can take a year or several years to reach a good standing. However, there are things you can do to accelerate the process. Paying down debt will reduce your debt-to-income ratio. Paying your bills on time will improve your payment history. Making changes today will get you started in the right direction.
Eliminate Unnecessary Spending
Running up credit card debt is one of the most common reasons for poor credit. Excessive amounts of this type of debt tells lenders you have no self-control, making you a greater risk. By avoiding adding additional debt you’ll lower the amount you owe, eliminate interestand improve your credit score. If there’s something you want, save for it instead of buying without the resources to pay for it.
Establish Savings
Another reason many Americans have a poor credit score is the lack of savings. Unfortunately, without a nest egg to fall back on, you end up dipping into money already allocated to pay bills. This creates a domino effect of late payments in the event of a financial emergency.
Benefits Of The Household Budget
As stated earlier, your payment history represents the biggest percentage of the calculated credit score. Late payments or missed payments can prevent you from ever achieving a good credit score. Thankfully, a household budget will ensure that you make timely payments. It tracks your spending helping you to stay focused and achieve financial goals. Budgeting is easy. It’s something everyone can do. Make a list of what you owe out, add in other expenses for the month before deducting the final number from your total income. If you don’t have enough to cover everything, you can make changes to your budget to pay down debt and free up money to live.
Having a good credit score will make life easier and more cost-effective. If you have a poor score, make the necessary changes and reap the benefits.
James Pierce
Author
James Pierce, a Finance and Crypto expert, brings over 15 years of experience to his writing. With a Master's degree in Finance from Harvard University, James's insightful articles and research papers have earned him recognition in the industry.
His expertise spans financial markets and digital currencies, making him a trusted source for analysis and commentary. James seamlessly integrates his passion for travel into his work, providing readers with a unique perspective on global finance and the digital economy.
Outside of writing, James enjoys photography, hiking, and exploring local cuisines during his travels.
Alberto Thompson
Reviewer
Alberto Thompson is an acclaimed journalist, sports enthusiast, and economics aficionado renowned for his expertise and trustworthiness. Holding a Bachelor's degree in Journalism and Economics from Columbia University, Alberto brings over 15 years of media experience to his work, delivering insights that are both deep and accurate.
Outside of his professional pursuits, Alberto enjoys exploring the outdoors, indulging in sports, and immersing himself in literature. His dedication to providing informed perspectives and fostering meaningful discourse underscores his passion for journalism, sports, and economics. Alberto Thompson continues to make a significant impact in these fields, leaving an indelible mark through his commitment and expertise.
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