Your credit score is a numerical representation of your statistical likelihood to repay credit that is extended to you. Scores range from 350 to 850. Your score is a “snapshot” of a specific moment and can change with new actions and the passage of time.
Some things that can help you tip the scales in your favor include:
- Paying all of your bills on time or early. Even a 30 day late on a small credit card can have a significant negative impact on your scores.
- Don’t co-sign for someone else’s loan — their late payments are your late payments!
- Don’t close old revolving accounts no longer in use.
- Don’t open new accounts unless absolutely necessary (inquiries may or may not affect your score depending on the rest of your credit history).
- Report fraud immediately. If you find yourself the victim of fraud, immediately contact the credit bureaus, your credit card companies, banks and the FTC.
- Monitor your credit. Order a copy of your credit report once a year.
- If you are planning to refinance or buy a home, don’t make any purchases or run up the balances on your credit cards prior to the transaction. They will be counted in your debt-to-income ratios.
In part 2, we will unveil the mystery of what makes up a credit score and the secret formulas behind credit score calculations. Special thanks to Advantage Credit for help with the content of this series.
