Do’s and Don’t’s about building your credit score

Credit score is defined as an indicator of how likely you are to delay on credit card or loan repayments. Your credit score is determined and changed by a combination of the following aspects:

  • Your payment history.
  • Are your bills paid on time? Is there any late payment recently? How often were you late on repayments?
  • Amounts owed to creditors or lenders. Are your credit cards maxed out every month? Do you already have a lot of debts?
  • Your credit history. How long have you been using credit cards and have you ever established a good credit history?
  • Are you opening new bank accounts or applying for new credit cards? Are you borrowing more money? Any declines?
  • Types of credit products in use. Do you have a good mix of accounts?

Other things such as sex, age, race, color, original nationality and marital status would not hurt your credit score. Only those positive and/or negative information mentioned above can really influence your credit score.

Here are some tips to get a higher credit score:

To DO

  1. Always pay your bills on time. Any late payments more than 30 days will directly have an adverse effect on your score. The sooner you can learn and begin to monitor your credit and pay bills on time, the sooner you will improve your credit score.
  2. Make sure to keep your credit card balance low. If you can’t repay the balance next month, do not keep adding it up.
  3. If you’ve already seen some problems in the past, you should try to re-establish your credit and get back on track, showing the world that you’re serious, this will raise your score in the long terms.
  4. Monitor and check your credit report regularly, which won’t hurt your credit score.

DON’T

  1. Open lots of bank accounts or credit cards that you don’t really need.
  2. Transfer credit cards balances from one to another. It’s better just to pay them down then gradually pay them off.
  3. Apply for tons of new credit cards all at once, especially when it’s your first time to use credit, since it looks too risky for creditors.

Remember this: Credit Score makes a big difference. Anything below 500 will be a nightmare. Hitting the 620 mark, you are considered as Fair, 680 is Good and anything above the 700 mark is Great. You will be considered as a prime borrower if you have a score at 700 or above, and shouldn’t have any problem to get credit cards or loans approved with the best interest rates.

Your credit score, Your life.

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