Building your credit score to a score of 700+Building your credit score is very doable with the right knowledge. It doesn’t matter if you need to build your credit score because you are just starting out in the world, or you went through tough financial times and need to rebuild a poor credit score and history. The process and the steps are the same.
Step one would be to identify different types of credit accounts that when you get approved for will show on your credit report and begin reporting a payment history to the three main credit bureaus. (Equifax, Transunion and Experian) (continued below) The formula for calculating your credit score looks at the history of payments made on credit accounts on your report. The longer the history of payment, the higher number of points you get to accumulate towards your credit score.
Credit scores range from as low as 300 to as high as 800. A score above 620 is considered good while anything over 680 is excellent and will usually be able to qualify for the best interest rates made on consumer products and services.
If your credit score is less than 620 you want to turn your attention to any derogatory or negative information that might be on your credit report. Get a copy of your credit reports from Equifax, transunion and Experian and go through them for errors or old negatives which you can dispute to have deleted from your report.
This will almost always lead to an increase in your scores.
On the other hand if your score is above 620 you want to turn your attention to a further building on your score by making sure all your payments stay on time and reducing your debt-to-credit amount ratio.
This simply means you want to pay down or pay off some of the credit you already have taken out. The reason for this is because the more credit you are using and closer to the limit, the more points are taken away from your credit score in this department.
DO NOT close the accounts if you decide to pay them off, you want to have the credit available which looks good to the scoring formula.
By following these guidelines you will be on your way to building your credit score to 700+ status! Related
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