A credit score is a number generated from information related to your credit history. It can have far-reaching impacts on your finances. Lenders use credit scores to determine which borrowers to approve for loans. If you have a poor credit score, it can be difficult to get loans or credit, and you may face high interest rates. It is possible to increase or "repair" a bad credit over time through careful use of debt and credit.
How can I Start Repairing my Credit Score?
The most important factors in determining credit scores are whether you make debt payments on time and how much total debt you hold versus your amount of available credit. According to the Fair Isaac Corp., these two factors make up 65 percent of credit scores. Paying all your debts on time each month and reducing the total amount of debt you owe by committing extra cash to paying off debts will improve your credit score.
How Can I Repair my Credit Score Quickly?
Establishing a good credit score may take years, but there are steps you can take to make quick fixes to your credit score. Order a free credit report from one of the three major credit reporting agencies --- Equifax, Experian or TransUnion --- and inspect the credit report thoroughly for factual errors. Creditors sometimes make mistakes in the information they furnish to credit reporting companies which can hurt credit scores. The U.S. Federal Trade Commission recommends sending a letter to both the credit reporting agency and the creditor to dispute any errors you find in a credit report. Resolving errors can result in a quick boost to credit scores.
What Is a Good Credit Score?
There is no exact number that constitutes a "good" credit score. According to Experian, most credit scores are in the 600 to 750 range and credit scores of 700 or higher suggest good credit management. If your score is below 600, you may need to improve it to be approved for loans and gain favorable interest rates.
What Else Influences my Credit Score?
Apart from debt payment history and your total amount of debt and credit, the length of your credit history, the types of debt you hold and newly acquired credit can impact your credit score. A long credit history tends to result in a better credit score. Opening and applying for new credit accounts can lower a credit score, especially if you have a short credit history.
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