If you’re curious about your credit score and how well you fare compared to other people in your country, you’re already a step ahead of the pack, as most people prefer to remain oblivious when it comes to taking responsibility for their finances. Knowing your credit score and being more aware of your overall financial health can make all the difference when you’re attempting to get financing for a big purchase like a house or car, or for when you hit a bit of a tight spot and need access to an emergency source of funds without dipping too much into your savings. Let’s take a closer look at what your credit score is, the factors influencing your score, and how it gives you the upper hand in the long run.
Why Knowing Your Credit Score Is Helpful
What is a Credit Score?
Your credit score is a calculated score that illustrates to lenders how responsible you are with money, how likely you are to pay back loans, and whether you’re a viable candidate to be offered credit of any kind. Your score affects all loans, credit card applications and even financing to study, so it’s important to maintain a good score (around and above 700) to give you the best chance to be approved. A high score also benefits you in another way, namely that you will be given better interest rate options, meaning you’ll pay back less interest on loans, compared to candidates with a worse score. www.usa.gov/credit-reports is providing official credit score information and extracting your credit reports.
The Factors Influencing Your Credit Score
You may be wondering about the factors influencing your credit score. Your income doesn’t have a bearing on the score, but there are more than twenty other factors which can influence your score each month, including how long you’ve had credit, the amount of times you’ve asked for credit, whether you’ve paid past monthly commitments on time, how much you still owe and generally how much credit has been extended to you. Gaining access to credit is not a “bottomless pit” so to speak, and you should be careful about taking out too many loans and credit cards, as the process can become unmanageable, especially if you suffer a setback like a job loss, or medical expenses.
The Factors Influencing Your Credit Score
Why Knowing Your Credit Score Gives You The Upper Hand
At the end of the day, your personal finance is your responsibility, so knowing your credit score and knowing where you stand gives you the benefit of being able to bargain with lenders, especially if you’re looking for a reduced interest rate. Knowing your credit score and the changes that may occur each month also becomes useful when incorrect information may creep into your credit report. You’ll be able to spot it right away so that it can be rectified, rather than have an error get in the way or you having access to a bigger loan for a house or a car. If you manage it throughout the year and slowly chip away at any existing debt, your credit score should remain stable in the process.
Ways To Improve Your Credit Score
The best way to increase your credit score is to get your credit card balance(s) down as much as possible, preferably paying back more each month than the minimum prescribed amount. If you make those payments, ensure they happen on time. If you’re going to miss a payment, let the lender know, as you may be able to come to an agreement for a double payment next month, or you may have other options at your disposal. Don’t pay off debt with credit. It only shifts the problem around and encourages further fees and other unnecessary charges. Live within your means, ensure that you make your payments on time, and you’ll see a stable credit score, and many great offers when it comes to making a big purchase.
