Have you ever wondered what all the fuss over credit scores is about and why they’re so important? Maybe you’re not even sure why people are concerned with building their credit, or about it being potentially damaged. Well, the reality is that your credit score actually says a lot about you and your ability to pay off debts to those who loan you money.
In a society that is increasingly becoming reliant on credit to make purchases, and since many people are unable to pay off their debts, it’s no wonder that lenders would be careful about who they give money to. And banks and credit lenders aren’t the only ones that are looking at your credit score.
Your credit score can affect you in a variety of ways. For example, in a competitive housing market, when you apply to rent a house, apartment or condo, your credit score can be a crucial factor. It tells a rental property owner whether you’re reliable enough to pay your rent on time. A credit score can also affect your ability to secure a mortgage, lease a car, get your dream cellphone and more.
Where your credit score falls between 300 and 900 can have a huge impact on your life. Insurance companies, potential employers, landlords, and even retailers, may want you to have good credit before providing you with services or products on credit.
How to Build a Good Credit Score
Now that you know how important your credit score is, you might be wondering how to build it up. Your first and most important tip is to always pay your bills on time. The benefit of paying your bills on time is that you are showing lenders that you are a reliable borrower. As you continue to make on-time payments, the more your credit score will grow.
While you should be making full payments, if you can only meet the minimum, then it’s essential that you at least do that. If you miss a payment, try your best to not let it happen again by setting a reminder.
Here are some other tips for building your credit:
- Don’t bounce cheques – your bank can report this information to credit bureaus
- Pay off your debt directly instead of putting it on another account
- Don’t apply for a lot of new credit in a short amount of time – this includes taking on a lease
- ● Get yourself a secured credit card where you deposit your own money into before use
Lastly, one of the most important tips for building and keeping track of your credit rating is to review your credit report at least once a year. You’ll be able to see if you’ve made progress, where you’ve made mistakes, and whether or not there is any incorrect information. If any information on the report is wrong, you need to contact Equifax or TransUnion and file a dispute immediately.
If you keep up with these tips, you should begin to see an improvement to your poor credit score within a year or two.