Why You Should Make Improving Your Credit Score a Priority

The importance of a good credit score can’t be overstated. Your credit score is one of the most important measures of your financial health, and one of the easiest ways to judge how responsibly you use credit. For one thing, a good credit score is essential for buying a home or getting a mortgage. That’s because lenders use your credit score to decide whether to lend you money and under what terms.

Checking Your Report

The first step to improving your credit score is to check it and know what you are working with. Pull a copy of your credit report from each of the three major national credit bureaus: Equifax, Experian, and TransUnion. You can do that for free once a year through the official AnnualCreditReport.com website. Then, review each report to see what’s helping or hurting your score.

Checking your credit score is a smart habit to get into. You can earn points that might make you eligible for better rates, easier approvals or other perks on new credit cards and loans.

Understanding Your Credit Score

Your credit report and score are one of the most important tools available to lenders – helping them determine whether or not to extend credit. Understanding your score and its components will help you make overall decisions about your borrowing activity.

FICO® Scores are more than just a number. They give you a clear picture of the risk that you represent when you apply for credit. Use that information to identify ways to help raise your credit score and make your credit less risky overall.

What Goes Into Your Score

There are several factors that go into determining your credit score. The best approach is to work on all the different elements and not just focus on one at a time.

Here are things to consider if you want to improve your score:

• You have to have some credit to work with. No credit = bad credit.
• You must pay all your monthly bills on time. Getting behind on payments not only hurts your score, but can stay on your report for years.
• Don’t use more than 30% of your available credit.
• Avoid closing credit accounts even if you don’t plan to use them again.
• Don’t apply for a lot of credit accounts at once. It’s a red flag.
• Use your credit each month but pay off the balance before it’s due.

A good credit score has a number of financial benefits. It can help you rent an apartment or even get a job. It will help you get the lowest available interest rates on loans. If you want to refinance your current home, you may want to put extra effort into improving your credit score before contacting a lender.

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