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Maintaining an Excellent Credit Score

A credit score is a three-digit number that can either make life easier or more difficult. The higher the score the better your chances are to get an approval for a loan. The good news is that you can raise your score and enjoy the benefits that come with it.

What Is The Score Based On?

The three main credit sources determine your credit score using several factors. Payment history, how you pay your bills, represents the largest percentage standing at 35%. Your outstanding debt, types of credit, utilization, and inquiries represent the remaining 65 %.

What’s A Good Score?

A credit score ranges from 300 to 850. Banks and other lenders consider anything above 700 as good. Higher than this number is excellent. A score lower than 550 is poor. Many people have a middle range of 650, which is fair.

Denied Credit

Unfortunately, a poor credit score will make it harder to get an approval for a loan. While some lenders may still grant a loan, you can expect a higher interest rate. Today, the stakes are higher. Many companies that provide services such as insurance and medical won’t accept you, even if you pay cash. This can make finding a reputable carrier, physician or dentist in Naperville more difficult.

Stamped A Risk

A poor credit score can also prevent you from renting a property or landing a job. Unfortunately, a lower score translates to lenders that you’re a risk. Utility companies will require a deposit to hook up service and lenders may want a hefty down payment or collateral to approve a loan.

Improving Your Credit Score

The good news is your credit score is not permanent. You can raise your score substantially over time. Unfortunately, it’s not a quick fix. It can take a year or several years to reach a good standing. However, there are things you can do to accelerate the process. Paying down debt will reduce your debt-to-income ratio. Paying your bills on time will improve your payment history. Making changes today will get you started in the right direction.

Eliminate Unnecessary Spending

Running up credit card debt is one of the most common reasons for poor credit. Excessive amounts of this type of debt tells lenders you have no self-control, making you a greater risk. By avoiding adding additional debt you’ll lower the amount you owe, eliminate interest and improve your credit score. If there’s something you want, save for it instead of buying without the resources to pay for it.

Establish Savings

Another reason many Americans have a poor credit score is the lack of savings. Unfortunately, without a nest egg to fall back on, you end up dipping into money already allocated to pay bills. This creates a domino effect of late payments in the event of a financial emergency.

Benefits Of The Household Budget

As stated earlier, your payment history represents the biggest percentage of the calculated credit score. Late payments or missed payments can prevent you from ever achieving a good credit score. Thankfully, a household budget will ensure that you make timely payments. It tracks your spending helping you to stay focused and achieve financial goals. Budgeting is easy. It’s something everyone can do. Make a list of what you owe out, add in other expenses for the month before deducting the final number from your total income. If you don’t have enough to cover everything, you can make changes to your budget to pay down debt and free up money to live.

Having a good credit score will make life easier and more cost-effective. If you have a poor score, make the necessary changes and reap the benefits.

About The Authors

Alberto Thompson

Alberto Thompson - I live in Vancouver, Canada, and work as a web developer and graphic designer. Back end programming (PHP, Django/Python, Ruby on Rails) to front end engineering (HTML, CSS, and jQuery/Javascript), digital usability, user interface, and graphic design are all areas of web development where I spend my days. I'm a huge fan of web creation and design in all of its forms, as well as assisting small businesses and artisans with their online presence.

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