Credit scores play an important role in creating your financial profile, and in securing your ability to get loans at favorable rates. Here are some tips to help you understand and manage your score:
- Get a copy of your credit report, and make sure the information in it is correct. Under federal law, you can get a free credit report every 12 months. You can do this 3 ways: by going to www.freecreditreport.com, by calling 877-322-8228, or by completing the Annual Credit Report Request Form (PDF) and mailing it to Annual Credit Report Services, P.O Box 105281, Atlanta, GA 30348-5281.
- Tip: If you chose to call-in for your report, be prepared to wait 2-3 weeks to receive it. The other option may be faster.
- Work to achieve a credit rating of 700 or higher. Most credit scores, according to Experian, fall between 600-750. Aspiring to 700 or higher will motivate you to do the things that impact your financial health and help you enjoy lower loan rate opportunities.
- What are those “things”? First and foremost, pay your bills on or before their due date. Setting up auto pay can help, but keep an eye on your balance so you don’t overdraw your account.
Also, take stock of how leveraged you are. If your debt is close to your credit limit, that will impact your credit score.
Be prudent about applying for new cards. Applying for too many cards in a short timeframe could trigger a negative action on your score.
And finally, look at the type of debt you have; a little on each mortgage, credit card and installment loans is preferable to having all your debt concentrated in one area or through one source.