So you have contacted one of the “big three” credit bureaus (Experian, TransUnion, or Equifax) and received a free copy of your credit report. As you are looking over this information, your eye catches a number which seems to stand out from the page. You stop to scrutinize the text explaining the number, and you find out that this is your credit score. You can’t help but wonder if your 700 credit score of is a good or bad.
As far as the ranges of these scores go, the higher the better. A high score means both your credit rating and your credit worthiness is in pretty good shape. So, a score of 700 is pretty good when you look at the big credit picture. A score of 800 or more is considered just about perfect, so you will be looked upon fairly favorably when lenders are deciding whether or not you are a good risk. But, if your score is considerably below 800, do consider that a score in the mid 700s or higher is considered the best risk. So, you might just want to work on improving your score a little in order to get the best interest rates you possibly can.
Pay on time, all the time. It’s simple: Late payments, collections and bankruptcies have the greatest negative effect on your credit scores. By being punctual, you can keep your score up (and your interest rates down). Some folks struggle with making payments on time. Are you usually late? The best thing to do is sign up for automatic payment. Or try banking online with email reminders. You’ll be surprised at how doing something like changing your bill paying routine can help. And if you do pay on time, don’t change a thing!
Following these 3 steps will get you headed in the right direction to a better credit score. There are more ways to improve your score. For additional tips, visit the Credit Learning Center. Also be sure to check out the Credit Score Simulator to see how scores can be impacted by changes in credit behavior. By taking aim at a higher credit score, you’re taking control of your finances. So the next time you need a mortgage, a car or any kind of credit, you’ll know your number is going to get you the interest rate you deserve.
Third, make sure you are paying all of your bills on time. If for some reason you are behind on your payments, contact each of your creditors and ask them for an extension on your payment due dates. You may also sometimes be able to negotiate a lower minimum payment for certain credit cards or other accounts.
Fourth, you can actually improve your credit score by opening new credit cards or store accounts. While this sounds like financial suicide for someone who already has a low credit score, having more credit extended to you actually improves something called your credit-to-debt ratio. In other words, the more credit you have, the better. Of course, the trick is that you must not borrow against the newly-acquired debt instruments. Hint: try to open new accounts one at a time every 3 months or so, and be sure to watch out for cards with high annual fees.
The fifth way to raise your score is to transfer all of your existing credit card balances to your lowest-interest cards. This could save you $100s per month in lower debt payments, which will help you pay down your existing debt faster and thereby help raise your credit score. Watch out for high balance transfer fees, but sometimes even paying these might be worth it if it means saving more money in debt payments.
Raising your credit score can be one of the smartest financial moves you make. Spend the necessary time and effort improving your credit score now and enjoy the long-term benefits of lower debt payments and the ability to qualify for more types of lower-interest loans.
A credit score is computed by the credit bureaus based on your credit history and other financial information. In return, lenders can view a credit score to determine the amount of risk that will be associated with making a loan to a particular person. Credit card companies, mortgage lenders, financial institutions, and many other lenders will use the credit score as the determining factor on whether or not a person is suitable for a loan.
There are several actions you can take and several actions you can avoid that will raise your credit score or prevent it from dropping.
Teenagers, college students, and other young adults are more likely to treat a credit card as if it is simply money in their pocket that does not need to be repaid. The truth is that a young adult should treat their credit card as a means to establish, build, and increase their credit score. They cannot do this by avoiding payments and treating their credit limit as money in their pocket.
Maxing out a credit card can be a bad thing on a credit report. It is always safe to pay off the entire balance each month to avoid paying over time on the card. Consistently carrying a balance from month to month on a credit card can lower your credit score. If you must keep a balance from month to month, be sure to keep it at a minimum level.
The most popular type of credit score among lenders is the FICO score. More than 80% of the banks in the United States use this type of score. Usually, you will have a separate and distinct score from each of the three main credit bureaus, which are Equifax, TransUnion, and Experian. These scores are taken strictly from the information in the file that each credit bureau keeps on you. When the information that is saved in your credit file changes, so does your FICO score.
Maybe you went car shopping one weekend and had several dealers check to see if you qualified for a car on their lot you were interested in. Maybe you took your bank up on an offer for a new bank card. Maybe you applied at two department stores for credit cards while you were at the mall. Or, maybe you are trying to buy a new home. All of these things could change your FICO score.