|
Articles » What Is A Good Credit Score | | How To Develop A Good Credit Score From Scratch |
|---|
Developing a good credit score begins with understanding what the factors are that affect your credit score in the first place. The three credit reporting bureaus, Experian, Equifax, and TransUnion, all collect information on your credit history and put it into a document known as your credit report. The items on your credit report are rated with a scoring system developed by Fair Isaac and Company, resulting in your credit, or FICO, score. If you’re starting from scratch or starting over after a bankruptcy or foreclosure, here are some tips on how to develop a good credit score:
1. Check your credit report to see what is already on it. Erroneous or expired information can bring your score down and you can contest it in writing with the credit bureaus.
2. If you have utilities or credit cards in your name, make sure they are paid on time. Late payments are reported to the credit bureaus and will decrease your credit score. Timely payments may or may not show up but they definitely won’t hurt you either way.
3. If you don’t have open lines of credit anywhere, apply for some. Department store credit cards are easy to get if you have no credit history and you can also apply for pre-paid major credit cards. These require a deposit and you can’t go over the deposit limit, but the payments you make each month will help you build your credit history.
4. Go to a bank or credit union and open a checking or savings account. You can use the savings deposit to get a secured loan. Even if you just put the loan money back into the bank your monthly payments will be recorded on your credit report and improve your FICO score .
5. Avoid bankruptcies and legal disputes at all costs. These show up on your credit report in “public record accounts” and can remain there for seven to ten years.
6. Keep your debt to credit limit ratio under 10%. Don’t max out your new credit cards. Use them for sensible purchases each month and pay them off in full. This will increase your credit score and prevent you from having to pay expensive interest charges.
Your credit score is the most important three digit number you will have attached to you in your lifetime. If you’re building from scratch, just follow these tips and develop goo spending habits and you’ll build yourself the type of credit score you need for financial success.
Comments
|
|
|
|
