Your credit score is a number that represents the risk a lender takes when you borrow money. A FICO score is a well-known measure created by the Fair Isaac Corporation (FICO) and used by credit agencies to indicate a borrower's risk. The average American has a credit score of 700 which is considered good. A score of 800 is considered to be excellent. The majority of credit scores fall between 600 and 750.
Your credit score can be used to impact:
- Loan amounts, interest rates and approval
- Credit card approval
- Home and rent approvals
- Car insurance rates
- Cell phone contracts
- Job offers
- Private student loans
- Established utility service
What hurts my credit score?
- Missing payments, regardless of dollar amounts it can take up to 24 months to restore credit of one late pay
- Credit cards at capacity (maxing out credit cards)
- Closing credit cards out
- Shopping for credit excessively
- Opening up numerous trades in a short time period
- Having more revolving loans in relation to installment loans
- Borrowing from finance companies
- Transferring balances
What doesn’t affect my credit score?
- Debt ratio
- Length of residence
- Length of employment
- Criminal record or personal information
How can I improve my credit score?
- Pay down on credit cards, keep balances low and pay off debt
- Pay your bills on time
- Do not close unused credit cards
- Do not apply for too much new credit
- Only open credit card accounts that you really need.
- Dispute any inaccuracies on your credit reports
- If you are in collections and you pay off the amount due, it remains on your credit report for seven years.