A credit score is more important to a consumer than they may think. Many people have heard about the rating however they may not know much about it. A person’s credit score can affect their ability to buy a car, a home, or any other time they go to borrow money. It can also affect the ability to obtain a cell phone contract, have gas or electricity utilities set up and it can even impact a person’s ability to get a job. A credit score is a numerical value that can range from a 500 or 550 credit score all the way up to 850.
The range just described applies to the FICO calculated credit score. Vantage Score is another newer type of measurement that is used for shorter term reports. The FICO score however will show accounts that are reported for up to seven years into the past. A credit score is basically a synopsis or quick reference grade as to the overall report information. The information contained in a person’s credit report is used to generate the score. As a result, things like on-time payments, quantity of accounts that are in line with a person’s income, accounts that do not have over a 50% revolving balance from month to month and accounts that have been open and in good standing for a long period of time are all things that make a credit score higher.
It is not hard to guess what makes a credit score not so good. Things like bankruptcies, lawsuits, and delinquent or charged off accounts, late payments, garnishments, or accounts that have routine late payments over a long period of time all make a credit score lower. People how registers a score of 500 or 550 has very poor credit and individuals who do not score at all have even worse credit. A good range to be in is about 700 and up. For instance the minimum credit score to qualify for market rates or rates that are most often advertised by lenders is about 740. In general if you have a score of 680 and up, you should not have issue borrowing money. If your score is between 680 and 730, you may not be getting the best rates available however these are very good scores.
The best way to improve a 550 credit score is to perform a few basic behaviors when dealing with your credit. Always make payments on time because this is one of the most negative influences on a credit score. Lenders do not like to see that person always pays late. Restricting the number of accounts you have open is also a good way to improve a score. People may have paid on time throughout their entire credit history but still not have the best score because lenders view them as being overextended or having too many accounts open. The main idea to keep in mind is that lenders do not care how large of an account you are paying, how much money you make and even that accounts have been completely paid off all at once without being late. Lenders care about consistency and stability and one of the only ways to prove that are on-time payments over a 24 month period or greater without being overextended.
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