Improving a Credit Score: How and Why

Everyone has a credit score and it is used more often than many want to think about. A credit score is a score that creditors look at when deciding if they want to do business with someone or not. Those that have a poor credit score often find they have a harder time securing loans and getting lower interest rates on credit cards. Having a good credit score and history is something that everyone should be concerned with.

Why Credit Scores are Important

In today’s society, credit scores and reports are very important. This is something that just can’t be avoided and it shouldn’t be ignored. A credit score is made up of 5 parts:

·         Payment history

·         Amount of debt owed

·         Length of credit history

·         New credit

·         Types of credit

People that want to do business in today’s world will have to show they are worthy of the opportunity. Most businesses don’t want to take the risk of working with someone that has a history of not paying their bills in a timely fashion or someone that owes more money than they are earning.

In the past, millions of people were able to do business based on their business reputation or on the word of someone else. That rarely happens in today’s world. Most businesses want to know a potential customer’s credit score before they begin conversations of business dealings. Many of these decisions are made through computers with very little human interference.

Having a good credit score will help people in areas of their life many are surprised by. Having a good credit score will help get better car insurance rates, life insurance rates and more. Even utility companies and prospective landlords look at a person’s credit score. Rather than ignore it, it’s best to address any issues and try to increase that score as much as possible, as quickly as possible.

How to Improve Credit Scores

Everyone makes mistakes and it can be a mistake that lowers credit scores. What most people don’t realize is that credit scores can be improved and made better with the right information. Those that are interested in doing that should consider some of the following tips:

Annual Credit Report Review: Everyone should know what their credit report contains. Annually, a free credit report is given to people from the top three credit bureaus. It is very important to review that information and report any errors and disputes immediately.

Dispute: Thousands of people fall victim to identity theft every year. If there are any accounts that look strange on a credit report, dispute it and if there is a whisper of identity theft, report it IMMEDIATELY!

Pay Down Debt: It takes time and it takes a strong will but paying down debts contained on a credit report can improve a person’s score more than anything else. Some creditors will even negotiate a lower payment amount to settle the issue if payment is promised. Paying down the debt looks good on a credit report and increases a score tremendously. 

Jan. 23 14'

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