Written By: Lewis W.
Let's start off by describing what a credit score is. A credit score is a numerical expression that is based on a grading level of a person's credit files. This is to represent the responsibility and worthiness of a person's credit. A credit score is a 3 digit number that typically is between 300-850.
Understanding the Credit Score
A person's credit score is determined by the credit reports a bank will receive. This can include the payment history of a person, the amount of debt a person may have, and the length of their credit history. A higher credit score means that a person has demonstrated responsible credit behavior. This is very beneficial because when a person would like to request credit they will see their credit score and evaluate it and see if they are trustworthy or not. The typical range for credit scores are:300-679: Poor
630-689: Fair
690-719: Good
720-850: Excellent
There can be many different scoring methods, and some use other sources, such as your income when calculating credit scores. Credit scores are used by potential lenders and creditors, such as banks, credit card companies or car dealerships. This is important when deciding whether to offer you credit, like a loan or a credit card.
What are 3 tips to improve your credit score?
1. Pay your bills on time
The most important thing you can do to improve your credit score is pay your bills by the due date that your bank tells you. You can set up automatic payments from your bank account to help you pay your bills on time. Something to be careful is to make sure your account has enough money in it to pay the bills otherwise you will go into more debt that you need. This will also make you have an overdraft fee which is spending money that you don't have. This fee will keep charging your account as well.
2. Get copies of your credit report Get a copy of your credit report to make sure the information is correct. A method to complete this is to go to www.annualcreditreport.com. This is the only authorized online source for a free credit report. You can make sure that all your bills are correct and that you don't have any incorrect bills that you didn't spend. Another method you can do to check this is to call 877-322-8228 or complete the Annual Credit Report Request Form at www.ftc.gov/bcp/ edu/resources/forms/requestformfinal.pdf and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
3. Beware of credit-repair scams.
Sometimes doing it yourself is the best way to repair your credit. You can have companies that will offer to help you repair your credit score but some of these companies are very untrustworthy. They will scam you and take your money. The best solution to this is to do it yourself or find a company that you can trust and that has a lot of positive feedback. Most importantly, make sure your bank approves of this company to prevent the scams.The Federal Trade Commission’s “Credit Repair: How to Help Yourself” (www.ftc. gov/bcp/ edu/pubs/ consumer/ credit/ cre13.shtm) explains how you can improve your creditworthiness and lists legitimate resources for low-cost or no cost help.
Works Cited
“How to Improve Your Credit Score Fast.” Experian, 31 Jan. 2020, www.experian.com/blogs/ask-experian/credit-education/improving-credit/improve-credit-score/.“How to Understand Credit Scores.” Understanding Credit Scores | Credit Karma, www.creditkarma.com/credit-scores.
Irby, LaToya. “9 Attractive Benefits of a Good Credit Score.” The Balance, The Balance, 4 Feb. 2020, www.thebalance.com/having-good-credit-score-960528.
“What Is a Credit Score?” Equifax, www.equifax.com/personal/education/credit/score/what-is-a-credit-score/.
You had a really great article Lewis! I have seen the TV ads for credit Karma and what not, about credit scores and improving them, but honestly, I did not really understand what a credit score was. Your article provided me with a comprehensive definition of a credit score, how to check it, and how to improve it, and for that I am grateful. My only question is, what other factors go into determining credit score. For example I heard if you make a couple of big purchases in a short amount of time it could hurt your credit, or that taking out loans and paying them off helps your credit score more than paying out of pocket? Are these conditions true, and if so, to what extent does it hurt/help your credit score?
ReplyDeleteIt's really important that we know what credit or a credit score is early on. This informational article is very helpful because not many of us really know what a credit score does. I was unsure, which drew me to this article. Thank you for writing about this!
ReplyDeleteI really liked the steps you included for actually getting a good credit score. Most people know what a credit score is, but not really how to make it better. Spending money is pretty hard to not do especially when it involves bills. Doing that on time is something a lot of people can do. As for the scammers I didn't know that those people could make so much money off of other people like that. This article here really made me more aware about how and where I do my credit scoring. Other than that, great article!
ReplyDeleteBefore reading this article I didn't fully understand what a credit score was, but you helped me understand what a credit score is. I didn't really think a credit score matter before reading this article but, with a better comprehension of what a credit score is and how it can affect your life I understand that you have to be responsible with your credit cards and bills. My only question is what makes a person responsible when it comes to a credit score? Is it just turning in bills on time and not accumulating lots of debt?
ReplyDeleteThis is a great representation on how to deal with credit. Great read as well. The best thing a person could do though is to not have any credit at all... Having no credit score is't necessarily a bad thing. Not having one can forsure be inconvenient to someone but credit is really only used for things you can't afford to pay for up front. You are first less likely to overspend without credit and it is't as hard to get into debt as if you cant afford something, you can and should be able to wait until you can. Lastly with only spending with debit, you are more mindful about what you are spending as you can see the money you are spending leave your account right away.
ReplyDeleteLewis, this was a very cool read and taught me a lot about the importance of having good credit score. Where I work, there is another employee that caddies on the side of his own, independent credit recovery business, so I have had some exposure to the world of credit and its importance, but your article did inform me about some factors that I didn't really consider, like that you must be aware of scams. However, I am left still wondering more immediate ways to increase your credit score, as sometimes you need money immediately but are unable to get a loan.
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