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How To Improve Your Credit Score Rating

Feb 2, 2008
It is almost appalling to realize the vast number of consumers who do not know the tremendous impact that their credit score rating has on their everyday lives. Most people have heard of it but they have no idea how it is calculated or how and where it is used, which is probably much more widely than most people realize. Your credit score, sometimes also known as a FICO score, should be as high as possible to give you the benefits that a good credit score will provide.

Your credit score affects virtually every area of your life, and is not even limited to financial things. For example, a poor credit score can cause you to pay more for car insurance and even prevent you from getting that new job. By contrast, a high credit score makes it much easier for you to be approved for attractive loan and credit programs and makes many areas of your life much easier.

A special formula is used to calculate the three digit number which represents your credit score. Typically these numbers are between 300 and 850 as they are calculated using the FICO method. The score is derived by looking at various different factors for your credit and credit history. About 35% is related to your payment history and your on time payment performance. About 30% depends on the total amount of money that you currently have as outstanding debt. About 15% of the score relates to the length of time that you have a credit history available, or how long you have had these accounts. The remainder reflects new accounts recently opened and the number of different types of accounts you have.

If the calculated credit score for you is over 750, almost all companies would consider this to be an excellent score and a good credit risk. The range between 660 to about 710 would be considered average or acceptable, and scores under 600 are considered to be poor credit risks. If you are anywhere below 700, there are almost certainly things you should be doing to raise your credit score rating.

Whether or not you qualify for a new loan or line of credit is determined by your credit score. This includes your eligibility for loans, mortgage, and credit cards, and what interest rate you will be assessed, or even if you will be approved or not. It can also affect whether you need to leave a deposit when renting a home or buying a car.

To raise your credit score, there are several things you can do. The very first thing is to start paying each and every one of your bills on time so that you create a history of on time payments. Keep the outstanding balance on your credit cards well below your credit limit, where the ideal amount is around 25% to 30% of your credit limit. Avoid applying for new accounts all the time since having a lot of open accounts is negative.

Your credit score rating is extremely important to you and impacts many more areas of your life than you even realize. Put forth the effort to understand what your score is and how to improve it so that your financial future can be much easier.
About the Author
If you are interested in raising your Credit Score Rating as well as getting a free copy of your credit reports to help you get going with this, please visit our web site at http://www.credit-help-center.com
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