By this point in time, most of us know that our credit score affects nearly all of our financial options available to us:
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Loans amounts we can receive
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The rates we receive on borrowed money
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The type of car we can afford
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Where we can afford to live/the type of house we can buy
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Even where we can get a job!
Though, surprisingly, many people do not even know exactly what their credit score is! It is actually simpler than you might think. Basically, your credit score is made up of five factors. The score of these five factors together make up your credit score:
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Bill paying history; one critical portion of your credit score is whether or not you pay your bills on time. This is a lot more important than people think. If you know that you are going to be short for a bill before your next paycheck, you should strongly consider finding a way to get that bill paid on time; such as a payday loan.
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Outstanding Credit and Debt; Or in other words, how much money do you owe.
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Length of Credit History; How long have you had credit? The sooner you get your credit started and take good care of that credit, the better!
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New Credit; Did you know that new credit actually hurts your score? And having a lot of new credit really hurts your score. Think twice before getting a new credit card!
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Credit Variety; Make sure to have a good variety of credit such as loans and cards. Too much reliance on credit cards hurts your score.
Here are some good tips to keep in mind as well:
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Closing credit cards can lower your credit score; this may change in the near future, but for now, be careful about closing your cards instead of just not using them.
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Pay those library fees and traffic tickets! Surprisingly enough, these types of fines can get reported to credit bureaus and lower your score!
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Pay your taxes! If you do not pay the taxes you owe, and you get a federal tax lean,that looks very bad on your credit and will stay on for 7 years!
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Check your score! Only annualcreditreport.com is actually free and you can check your score once a year to make sure that there are no mistakes (which 80% of credit report DO have mistakes!)
