If you’re looking for financing, your credit score will affect several factors including the amount you can borrow and the interest rate you will pay. That credit score will give you access to financing for a house, a car, college tuition, store credit and more. A higher score will put you in a lower risk category of borrowers. A lower score will lead to higher interest rates and fees. So it’s important to understand what goes into a credit score.
In order to maintain a top notch credit score you will need to have a payment history free from late payments. Always pay all your bills on time. Creditors will report your payment history to the credit bureaus. One of the most important factors that are used to determine your get credit score is your payment timing. Do you pay all your bills by the due date? Or do you let them go past? Those who always pay on time no matter what will maintain the best possible score.
We can request a copy of our credit file for free from the major credit reporting agencies – Veda Advantage, Dun & Bradstreet or Tasmanian Collection Services (if we are Tasmanian). This will be provided within 10 working days – or for a fee it can be provided urgently.
Your FICO score also considers the Karma build Utilization Rate. It is the ratio of all your credit card balances to the credit limits. It is good if you can maintain it at 30 %. It is fantastic if you pull it down to 10%. Never max out your credit card. Make sure that the accurate credit card limits are reported to credit bureaus.
Even though, credit is very important to have, you need to use it wisely and frugally. Do not let your debt surmount and become train wreck in the making. Many people experience these types of problems with credit cards. They forget that a card does not work like a raise from your boss. A charge card is not an extension of your income and should only be used in times of emergencies and for important large purchases that you can otherwise not afford. Furthermore, in order to maintain good credit you will need to keep your debt versus available credit ratio no more than 30%. That means that if your credit card grants you $10,000 in credit you should only spend no more than $3000 on that card. Those who exceed this ratio will run the risk of damage.
Investigate refinancing your mortgage -Rates are still low and attractive, potentially saving a significant amount over the term of your loan. Do not extend the term unless absolutely vital to stay afloat.
Having bad credit is not the end of the world, but it certainly can make life a lot less pleasant. The most important action is to check your credit score regularly and get proactive about identity theft protection.