With Valentineâs Day around the corner, youâre probably thinking about your plans for the big day. Whether youâre celebrating with your significant other or friends, love is definitely in the air. But do you feel that love for your credit score? Thatâs rightâitâs time for you to fall in love with your credit score. And weâre here to help.
What Is a Credit Score?
A credit score is a single number that reflects the overall state of your credit history. Itâs used by lenders to determine your eligibility for a loan. The score is calculated and reported by the three major credit bureaus, which are Experian, Equifax and TransUnion. Every bureau calculates its own score, so you can have a different score with each agency.
What’s an Excellent Credit Score?
Credit scores are broken into ranges. Scores in higher ranges are considered good or excellent. People with these higher scores can typically get approved for more loan options and may get better terms, interest rates, APRs, etc.
How credit scores are broken up depends on which model is used. Firstly, thereâs FICO. This credit score range was developed by FICO, a company that specializes in predictive analytics. FICO uses your credit information to create your credit score, which will help lenders predict your behavior. Hereâs the FICO score range:
- 800 to 850: excellent
- 740 to 799: very good
- 670 to 739: good
- 580 to 669: fair
- 300 to 579: very poor
Then thereâs VantageScore, which is a result of a joint venture from the three major credit bureaus. Hereâs the VantageScore credit score range:
- 750 to 850: excellent
- 700 to 749: good
- 650 to 699: fair
- 600 to 649: poor
- 300 to 599: bad
Donât forget that Experian, Equifax and TransUnion each have their own credit score. Thatâs why itâs important to check them out whenever you can!
How to Feel the Love for Your Credit Score
You wouldnât settle for a mediocre date, so why settle for a mediocre credit score? If youâre ready to fall head over heels for your score, it might be time to improve your credit. Weâve got some tips on how to love your credit score the right wayâby treating it right.
1. Educate Yourself About Credit
You know how people like to say âWhat you donât know canât hurt youâ? That definitely doesnât apply to your finances. Take time to educate yourself about creditâespecially your credit.
First, learn about the five factors that play into your credit score:
- Payment history: Making up 35% of your score, this refers to how often you have late payments.
- Credit utilization: This refers to the amount of your credit that you use. Your credit utilization ratio should be less than 30%. This also makes up 30% of your credit score.
- Average age of accounts: If you have some older accounts, itâll show lenders that you have great financial management skills. This makes up 15% of your credit score.
- Account types: Itâs best to have a good mix of accounts, such as revolving accounts and installment accounts. This makes up 10% of your score.
- Inquiries: When you apply for credit, itâs common for lenders to do a hard pull on your credit. This results in an inquiry on your report. Inquiries only make up 10% of your score.
You should also learn about your own credit. Order your free credit report to see exactly where you stand so you can start improving your credit.
2. Get Organized and Pay Your Billson Time
Timely paymentsâwhich means never being late with loan payments or defaulting on loansâis the biggest factor in your credit score. This accounts for almost a third of your score.
Sure, getting organized and being on the ball financially sounds like a chore. But it also means that youâll be caught up on all your payments. Youâll feel freedom when you know you paid all the bills for the month.
Get a month ahead on bills so you’re never rushing to pay anything. You get the added benefit of a cushion that can be helpful if emergencies do arise. Plus when you make on-time payments your, credit score could rise.
3. Work with Professionals to Clear Up Errors
Finding an error on your credit report can feel like finding skeletons in your significant otherâs closet. Are they real? Is it a false alarm? The best way to tackle an error on your credit report is to go to a professional to help clear the air.
If you’re feeling ready to dumpÂ your credit score over a mistake, it might be time to call in the professionals. Instead of a couple’s counselor, you need aÂ credit repair agency. Sure, they can do the things you could do yourselfâbut with a lot of time and effort on your part. But the professionals can intervene for you to provide experienced guidance and resources to help get errors on yourÂ credit report fixed.
Get to Know Your Credit Score Now
Every good relationship starts with getting to know each other. Before you canÂ fall in love with your credit score, you need to get to know what’s going on with it now and understand your own goals for the future. Start by getting yourÂ freeÂ credit report card to understand your score and how you rank on each of the five factors that play into it.Â
Get It Now
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