Key Takeaways
- The three credit reporting agencies set the rules for how your credit score is calculated.
- A good credit score is over 740, so if you’re below that, you’ll want to work to improve it.
- There are three main things you can do to improve your credit score.
You’ve probably heard of the three wise men in the Bible. They were kings, and they may come to mind when you think of the three credit reporting agencies, TransUnion, Experian, and Equifax – the kings of credit scores. It’s important to understand their rules because, after all, the kings of credit make the rules of credit!
A good credit score is a score over 740, and it’s important to have a good score because you’re charged interest based on your current score. Your credit cards, auto loan, and home loan are all affected by your credit score, so a low credit score can be really costly.
If you’re concerned about your credit score and want to get it over 740, how do you go about doing that? Well, there are a few things you can do to improve your score.
First, you can obtain your credit report from a site such as freecreditreport.com. You’ll receive your credit report from the three agencies and you’ll want to check what’s on there. If you see anything that looks fraudulent or inaccurate, or if there’s any incorrect information, report this to the agencies. They have to change anything that’s wrong.
Second, always pay your bills on time. You should have 30 days to pay your bills. If you don’t pay by your due dates, you’ll get a big ding on your credit score.
Third, keep your utilization rate below 30%. How do you calculate that? Well, let’s say you have three credit cards. One has a $5,000 credit limit, another has $10,000, and the third has a limit of $15,000. Add those maximum amounts and you’ve got a total of $30,000 in available credit. Thirty percent of that is $9,000. You never want to go above $9,000 in balances at any point in time. If you do, it’ll bring your credit score down.
These are the primary things you can do to improve your credit score. If you do them consistently over the course of six to twelve months, you can get above that 740 score and ensure you’re getting the best interest rates possible. It’s a super important thing when you’re applying for money to make sure you’re not getting hit with an undue high interest rate. Until next time, enjoy.
If you’d like to read more on this topic, here are a few of Gary’s previous posts that you might enjoy:
Responsibility with Credit Cards
The Importance of Establishing Credit
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