Your credit score is one of the most important things about you, like it or not. It will dictate if you can buy a house or a car, and what kinds. Many schools now accept loans; your credit score can impact whether or not you can get a loan for your children’s education. You must stay up to date on your credit score. The first thing you should know is that there are five main pieces of information that calculate your score:
- your payment history
- level of debt
- credit age
- mix of credit
- credit inquiries
Some of these things affect your score more than others. Some things won’t affect it at all. In order to make sure you keep a good score, you should always pay your bills..all of them. This includes utility bills, library fees, parking tickets. Certain bills can be sent to collections which will lower your credit score if they go unpaid after a certain amount of time. If you aren’t staying on top of your credit, you may not even know that you have an outstanding bill.
One thing you should do is always keep your credit card balance as low as possible. The higher your balance, the lower your credit score. Your balance shouldn’t ever exceed 30% of your overall limit. When you carry a low balance, you come off as less risky to lender. They don’t like to see balances that are near maxing out the limit.
Something you should never do is close your oldest credit card. A major component of your score is the length of your credit history. You should always use it every once in a while, as card issuers will close cards automatically that have been inactive for long periods of time, and they don’t have to notify you to do so.
Every time you apply for new credit, your score will go down a few points. This even includes when you apply for a new apartment, or when you apply for a card at a retail store when the cashier casually asks if you’d like to earn a certain percentage off of your sale that day by applying for a special store card. Many times, a lender won’t come right off the bat and let you know. You’ve got to ask, and read in detail.
Lastly, if you ever see any errors on your credit report, be sure to dispute them. Never apply for new credit when you don’t need it, as that is how people generally tend to end up in debt.