Credit Score Must Do List
April 15, 2008
If you have not heard the news yet, your credit score is more important now than it has ever been. The reason for this is that most lenders are now trimming back on their lending and imposing higher standards for those that they do lend to.
This tightening of credit is far reaching and includes transactions such as home mortgages, car loans, credit cards, and even personal loans, also known as signature loans.
For those who are able to get a loan, the credit score is also used to determine the interest rate that will be applied to the loan. In very simple terms, the higher your score is the lower the rate you will get. Conversely, the lower your credit score the more you will have to pay in interest.
Credit scores are also known as FICO scores and they range from 300 to 850. Most consumers should make it a goal to get their score up to around 750 or higher. There are ways to do this.
Paying your bills on time and in full will help your score.
Next, pay down on your credit cards. When you carry a lot of debt you run the risk of having your score drop a few points. If at all possible, you want to keep your balances on your credit cards at fifty percent or less of your total available credit line.
Once you have a card paid off, keep it. The amount of available credit on that card will be applied to your total credit line availability and having more, in this case, is better. You will also benefit due to the credit history that is on that card. If you cancel the card, you lose the history and the added available credit.