The world revolves around credit and your credit score is one of the most important things in your financial life. A perfect credit score can give you plenty of leeway when it comes to repaying loans and interest rates. However, you will need to make sure that you keep your credit score in the best possible condition.
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Even if you have a solid credit score, many things can hurt the credit score. This brief article aims to give you some knowledge to help you understand what a good credit score is. We will also include a couple of pinpoint tips to ensure you know everything there is to know about your credit score. Here are 8 things you might not have known about your credit score:
How Your Credit Score Is Calculated
Many of us have credit scores and we only take the number at face value. However, you should understand how your credit score is calculated. One of the main methods used to calculate your credit score is by looking at your payment history and how long you have had credit. Did you know that one missed or late payment can negatively affect your credit score?
The Average American FICO Score is 695
A good credit score rating is considered anywhere between 670 and 730. It is worth keeping in mind that the credit score of the average American citizen is 695, which makes it a good score for gaining exceptional loans. This is also a good indication that buying a home is an investment you should consider if you can afford it.
A Good Credit Score Is Beneficial
Even if you don’t want to make any credit, having a good credit score can be beneficial in so many ways. It can help you reduce the interest you pay on loans and bonds. Additionally, you can get debt when you need it the most and it should not count against you in any negative way. The benefits of a good credit score are unrivaled.
Everyone Can Check Their Credit Score Once For Free Per Year
If you are not keeping track of your credit score, it can be stressful when you are looking to take out a loan. However, every person can have one free credit score check per year. At Annual Credit Report, you can enter your details and within a couple of seconds, you can have all the information about your current credit score.
Avoiding Unnecessary Credit Can Boost Your Score
If you find something you like and you don’t need it, you can try to save a bit of money to buy it. Instead of taking out loans to fulfill, your luxury needs, you can build up your credit score to be even better. Additionally, having a fiduciary relationship with your financial advisor can be even more beneficial.
Paying Off Outstanding Balances Is The Best Way To Improve Your Credit Score
Whether you are a stay-at-home mother and you have something on the side or you are a professional going to work every day, you can improve your credit score. If you have any outstanding balances, you will see a significant jump in your credit score when you pay them. If you cannot pay them all at once, you should consider making arrangements and making sure that you pay them on time. Eventually, you will be in a position that allows you to treat your husband the next Valentine’s Day.
Consider The Secured Card Option
The secured card is a credit card. However, you don’t have to make any credit and your card is backed by a cash deposit. If you don’t have savings and you want to improve your credit score, this is one of the best ways that you can go about improving your overall credit. The downside is that there are interest rates that will cost you.
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Small Mistakes Can Cost You
Even if you are perfect in the way you manage your finances, small things like canceling a paid credit card can hurt your credit score. Additionally, you want to avoid transferring all your funds to one account and this will reach the account limit and it could also harm your credit score.
Just in case, you should know some steps for damage control. Credit repair vs credit counseling can make the difference.
Your credit score is similar to your word on the streets. However, banks are not keen on taking the word of individuals and when your credit score is good, it shows that you are willing to pay your creditors on time. Let us know in the comment section if any of these tips have helped you or if we missed anything important.
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