To boost or not to boost credit score. Your credit score is a number, usually between 300 and 850, which now has great influence on a lot of things in your life.
Lenders use FICO scores to help them determine the potential for repayment according to the terms of the loan, and what interest rates to charge. If you have a bad credit score, you are rated as a higher risk by a lender. As a result, you will end up paying more in fees and interest - if you get approved.
"Creditors have better memories than debtors;
and creditors are a superstitious sect,
great observers of set days and times."
- Benjamin Franklin |
A credit score ranking that is above 700 will ensure you receive the best credit rates. If your score is less but you have time to plan ahead, you can work to boost credit score results and improve your position.
In spite of what you may think, your credit score isn't based on, or even influenced by, your age or your income. It is based on a complete analysis of your past use of credit. Factors like how many payments you have made on time and how much credit you use on a regular basis, contribute to your score. Correcting your bad financial habits and negative credit patterns in order to boost credit score can be achieved, but it takes time and there are no quick fix solutions or magic answers.
Quick-fix efforts can also backfire so the best thing to do is to learn to manage your credit responsibly on a consistent basis. You can, in effect, boost credit score results by taking the right steps.
Some best practices include paying your bills on time and using a small percentage of your available credit on a revolving basis. Your payment history is the most important thing in calculating your credit score. If a bill is overdue more than 30 days, it will show up as a negative on your credit report.
Additional best practice tips are available in our free tool, Building Better Credit.
Any prospective credit-card issuer, seeing a pattern of late payments will be inclined to raise your interest rates even if you have always paid on time on their card in order to leverage against potential risk.
If you have missed payments, get current and stay current – or better yet, pay the balance off entirely each and every month.
At the very least, reduce as many of your credit-card balances as you can. Consumers may believe that maxing out a credit card improves their credit score, but that idea is false and misleading.
The closer that you allow yourself to get to your credit limit, the more negative impact it will have on your credit score. This is definitely no way to boost credit score results.
It is advisable to keep outstanding balances below 25% of the credit available to you. In any case, if you use a high percentage of the available credit limit, chances are that you are spending more than you can afford and will, at some point, have trouble making payments. This is a "trouble ahead" sign to leanders and this behavior will eventually lower your credit score.
In the past, consumers were advised to close unused lines of credit and unused credit card accounts before applying for mortgages. The logic was that prospective lenders would worry less about their ability to pay off the debt if they could not see these accounts on the report. This no longer holds true and in fact, if you close unused lines of credit, you increase the ratio of debt to available credit and that can negatively impact your credit score.
If you are committed to boost credit score results, then don’t close your zero balance accounts. Leaving them open increases your available credit limit. Make sure you use the cards, but pay them off right after using them.
Also, limit your applications for credit. Every new application for credit, leads the prospective lender to check your credit report and too many credit bureau inquiries can also lower your credit score. Lenders see this pattern of behavior as a possible "scramble" for money and this does not serve you well.
Overall, keep in mind that your credit score, is just a score. It should not define who you are or how you are judged by others. Understanding the ins and outs of credit scoring will hopefully enable you to avoid the need for credit counseling and enabl you to manage your financial life with greater long-term success.
"It's not your salary that makes you rich,
it's your spending habits."
- Charles A. Jaffe |
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Debt is NOT your friend. It's not a wonderful "tool" for building wealth. That's a myth.
