Category Archives: Credit Score

Improve Your Credit Score

1)      Check Your Credit Report – Improving or repair your credit score starts with getting a free copy of your credit report and checking for errors. Since your credit score is based on information on your credit report, it is crucial that this information is accurate. For example, check to see if there are:

  1. Accounts listed that aren’t yours
  2. Delinquencies, including late payments and charge-offs, that aren’t yours
  3. Negative entries that are more than seven years old (bankruptcies can take 10 years to fall off your credit report)
  4. Incorrect amounts owed

Read more on how to carefully review your credit report!

2)      Pay Your Bills on Time – As discussed in the factors impact your credit score, payment history makes up about 35% of a typical credit score. One late payment can have a major impact on your credit score. The higher your credit score is, the more a late payment can hurt it. Of the factors that affect a credit score, payment history makes up 35% of the typical credit score. Ensuring that all your bills get paid on time is essential.

To help you pay your bills on time, set up payment reminders or automatic payments. It also helps to keep track of what you owe and to whom you owe.

3)      Pay Down Your Debt – How much of your available credit you’re using makes up 30% of a typical credit score. The score looks at how much of your credit limit you’re using on each card, as well as how much of your combined credit limits you’re using on all your cards. The lower your balances are in relation to your credit limits, the better it is for your credit score.

The score also looks at the progress you’re making on paying down installment accounts, such as auto loans and mortgages. It compares how much you owe to what you originally borrowed. Paying down the balances over time shows consistent and responsible credit-handling behavior and this will help boost your score.
Here are tips on how to pay down your debt.

4)      Don’t Close Credit Cards or Other Revolving Accounts – If you want to increase your credit score, don’t close any of current accounts. Ending your accounts can never help your score, and it may actually hurt it. This is because closing your accounts reduces your total available credit, and that makes the gap between your credit limit and the balances you carry smaller. The smaller the gap is, the more it hurts your credit score.

It’s especially important to keep your oldest account active. Closing older accounts can hurt you because the FICO credit score formula takes account the age of your oldest account and the average of all your accounts. Shutting them down can make your credit history look younger than it actually is, and your score can drop as a result. Even if you don’t use those accounts anymore, you should still charge something occasionally because the lenders may decide to close them for you if they see them as inactive.

5)      Apply for Credit Sparingly –Responsible credit users don’t just apply to credit cards from multiple department stores just to get a 10% discount. Although you might save 10% on your current purchase, you can wind up paying more in overall interest, as too many credit applications can lower your score. Responsible credit users don’t apply for credit they don’t need. They try to spread out new credit requests, so that they’re not opening multiple accounts in a short period of time.

Tips to Paying Down Your Debt and Improving Your Credit Score

How much of your available credit you’re using makes up 30% of a typical credit score.  Thus, to improve your credit score, you should keep track of much you charge on each card and always pay down your debt. The less balances you carry, the better it is for your score.

Tip 1: If you have a large balance on one card and the other accounts carry zero balances, transfer some of your debt from that card to the unused cards to improve your credit score.

Doing this can help your score because it is better to have small balances on a few cards than one big balance on a single card. To have a good credit score, you should only use a portion of the available credit limit on each credit card account. However, this will only work in the short run. In order to improve your score in the long term, you actually have to pay down your debt, not just move it from one card to another.

Tip 2: If your goal is to improve your credit score, prioritize and pay down the debts that are closest to the accounts’ credit limits first.

Once the closest has been paid down to below 50% of its limit, you can start paying down the second closest. Although many people argue against this approach and will advise you to pay off your highest-rate debt first because it makes a lot of financial sense, it isn’t the fastest way to improve your credit score.

Tip 3: Avoid consolidating your debts. Although many people want to transfer their balances to a single card to take advantage of a low rate, it is typically better to have small balances spread across all your accounts rather than having a large balance sitting on only one account.

Finding Money to Pay Down Your Debt

Here are a few tips on how to pay off your debt:

1)      Sell your stuff –Sell items you don’t need by organizing your own garage sale, taking them to consignment shops, or auctioning them on eBay.

2)      Trim your expenses – Eat out less often, shop using a grocery list, and find free entertaining things to do instead of going out and spending money. Tracking your spending can also give you ideas on how you can save.

3)      Boost your income – Pick up a part-time job. See if you can find extra work that will boost your income to help you pay down your debt.

Read more tips on how to pay down your debt

The Importance of a Credit Score

Need to apply for a mortgage, auto or a personal loan? Whenever you apply for credit, lenders will check your credit score to see if you qualify for a loan. But what exactly is a credit score and why is it so important?

A credit score is a three-digit number that is a strong indicator of how likely you are to pay back the debt you owe, based on your past borrowing behavior. A higher credit score shows lenders that you are more likely to pay back the money you borrow. Likewise, a lower credit score signals a higher possibility that you may default on your loan. Although many people think that a credit score only matters in terms of whether or not you get approved for a loan, its importance actually goes beyond that. Your credit score can have a significant impact on other areas in your life.


A credit score is used to determine whether you get approved to borrow money to finance a house or car, your college tuition, or even to start up your own business. In addition, it is also used to determine how much credit you qualify for and what the interest rate of your loan will be. This means that if you have a higher credit score, you will be rewarded with lower interest rates, thus saving you a lot of money in fees.

Having a Low Credit Score

Most of us already know that if you have a low credit score, it is difficult to find a bank or credit card company to lend you money. But unfortunately, having a low credit score doesn’t just stop there. Not only does your score affect whether or not you can borrow money at a low interest rate, but it impacts other areas, such has insurance rates and employment opportunities.

Insurance Rates

Your credit score will likely play a role in determining your premium when you apply for auto or homeowners insurance. A low credit score can cost you hundreds of dollars in additional premiums each year.


Sometimes employers check your credit history because they believe that it is an indicator of how responsible you are. Many jobs that deal with money on a daily basis require applicants to be responsible in handling cash.


Many landlords do a credit check on potential tenants. Having a low credit score may indicate to the landlord that you might have trouble paying the rent on time.

Your credit score and history is one of the most vital parts of your financial life. Even if you have a high income, if your credit score is low, you may still be denied for lines of credit. Lenders want to minimize the risk that borrowers will default on their financial obligations. If you have bad credit, it is not the end of the world. By doing your research, you can learn about the factors that impact your credit score and implement ways to improve your credit score.