Don’t you think it’s funny that in this day and age who we actually “are” is based on numbers? The numbers game counts when you apply for a loan. So to save you any problems, you need to have a good credit score. At the time of writing, this means you should have a score of at least 700 and above to achieve what is termed a good credit score.
OK, so how do you go about making sure you have a good credit score?
In fact, just what is a credit score?
It’s the figure your creditor uses to help them decide whether or not you are a good credit risk. They use the credit score number as an indication to tell them whether it’s likely you’ll be able to pay your debt back, if they decide to approve a loan to you in the first place.
Normal credit scores range between 340 and 850. The lower your score, the less likely your loan is to be approved or, if it is approved, the higher the interest rate will be. So it literally pays you (in reduced interest charges) to get a good credit score.
This may all seem unfair. But the days of going in to see the bank manager in person have long since gone unless you run a really, really large business. Which means that credit scores are a fact of life that you have to live with. You can’t ask your loan company to make an exception for you – this simply won’t happen.
Many people in America and across Europe have good credit scores. So long as you keep up repayments on your current loans and credit cards, the automated systems will put a “tick” against you and this will help your credit score.
If you don’t have a good score then it’s up to you to make it good. Start by making sure all your payments are made on time. Pay the minimum if necessary – that will still count towards your score – but pay on time. Automatic payments from your bank account can help you to do this.
If you get in trouble, talk to your creditor about it. Ideally before it becomes a major issue with them. Work together to come up with a payment plan and then stick to it. Over time, your credit score will repair itself and you’ll gradually increase your score.
If you have lots of credit cards, stop using as many of them as possible. Cut down to one or two cards – preferably the ones you’ve held the longest.
If your credit score is just a few points from 700, then it is best to look at the document and see if everything stated there is correct. Who knows, you might get lucky and find out that there was an error made, this can often be the case for many people. If this is so all you need to do is call the credit agency to tell them about it and send any supporting documents, this is so an investigation can be done and the mistake can be corrected.
To get a copy of your credit score is quite easy, you can get in touch with one of these credit agencies namely Experian, Equifax or Transunion. Though the scoring system they use is different from one another, it states the same thing so you will know what it is. This report changes yearly, so get another one and compare the results versus the year before.
A good credit score of 700 and above can get you low interest rate when you whish to apply for a loan. With this money you will be able to buy a new house or car, pay for college tuition or even renovate your home. If you want to get such a loan, then you have to work for it as this number will not appear out of thin air.
It is always best to know what your credit score is before you even think of asking for a loan. This will avoid you the embarrassment of being told that there are issues with your credit score and remember if you are turned down, this will go on your credit file as well, having a negative effect.
Tags: Credir, credit cards, Credit Score, Equifax, Experian, Finance, good credit score, Loan, Transunion