For many people, keeping a close eye on their credit score and actively maintaining a healthy score can be a daunting task. This is especially true for anyone along the spectrum of new life choices or unexpected changes. Whether it’s purchasing a vehicle or home, or perhaps a sudden barrage of medical bills, one can be faced with the reality of the power held by those three numbers.
Defining the Credit Score
Let’s break down those numbers to get a better understanding of where you are and what it means for you.
850= Highest. If you are here, you are golden. You can expect the lowest of interest rates; any institution would be pleased to grant you a loan or anything else you might be requesting.
720= Outstanding. This is an excellent score and you can negotiate some good interest rates. Most institutions will grant approval with this score.
680= Good. This is a decent score. You are looking at a little bit higher interest rates with the possibility of some hesitancy or possibly denial of larger loan amounts.
620= Danger. This will cause concern for many institutions and higher interest rates.
500= Needs Work. It will be difficult to get approval for loans and other financial endeavors. There are most likely red flags on your credit report that need your attention & action to resolve.
How to Improve Your Credit
1. Check Your Credit Score
And check it often. This is the best way to make sure there are not mistakes on your credit report, and you can mark your progress. Most websites will make you pay to check it, but don’t do that either! Credit Sesame is a good website that won’t make you pay for checking it several times a year.
2. Set Payment Reminders
One of the most common ways people mess up their credit score is by missing their payments. If you know a bill is due the same day every month, or around the same time, then set up reminders on your phone! You have it right there with you at all times, so this is the easiest way to keep yourself in check.
3. Reduce Your Debt
You hear financial advisors say it over and over again: if you have debt, cut the card! This is the other common way people mess up their credit score. If there are debts you can’t get rid of right away, like student loans or mortgages, then pay the full amount on time. Every time you have a little extra money in your pocket, use it to pay back a little more debt. Consistency is key here.
Obtaining a better credit score is key when getting back on track and give you freedom in your finances. How can you improve your credit score? Create a plan and work towards it every day.
In what ways do you need to get back on track financially? Comment below!