1. If you spend more than 50% of your credit limit every month, this indicates to the Credit Bureau that you do NOT have enough cash on hand to meet your monthly expenses. This will identify you as a high credit risk and will actually reduce your credit score by 60 - 70 points overnight (Fair
Isaac).
2. If you miss 1 or 2 payments on your credit card debt, the issuing company will skyrocket your interest rate to a whopping 27% -
30%!
3. Out of a random sample of 3 million American consumers (included in Experian's National Score Index), 51% of them have at least 2 credit cards and 14% of them have 10 or more credit cards.
What is a Credit
Score?
Your
credit score is important. How important? Well, let’s put it
this way: If you’re interested in buying a house one day or
applying for a loan to go to college or even doing as simple as
trying to sign up for a new cell phone plan, you need to know
about your credit score. You need to know what it is, how high
it is and what it entitles you to. If your credit score is low,
you need to work to improve it. If it is high, you need to know
how to keep it high over time. Essentially, your credit score is
everything a potential creditor wants and needs to know about
it. It lets them know whether you’re the sort of person who pays
bills on time or whether you’ve ever defaulted on a loan. Think
of it as a reference on your resume when you apply for a new
job. And then think about the fact that
some employers will actually request your credit report to get a better idea
about the type of person you are. Now that you know just how
important your credit score is, continue reading to learn about
how exactly it works for you.
Understanding Your Credit Score
Video: Understanding the Credit Score
Rating
Watch this brief video that highlights the basics of a credit
score, including what goes into the score and how you can
improve it.
What Your Credit Score Actually Means
Credit
scores range between 300 to 850 with the higher numbers
representing those people who have a higher and better credit
score than those with lower scores. However, you need to
understand exactly how the major credit bureaus Equifax,
Experian, and TransUnion come up with these numbers in order to
see why the number you have is so important. Your individual
credit score is calculated by using mathematical formulas that
take your current payment history into account as well as your
debts and past debts, credit history and inquiries by creditors, employers and others into your
credit report. These formulas produce your credit score, which
is then used by creditors to determine whether or not they are
willing to lend you money. Good credit scores are typically
above 680 and those people who have good credit scores usually
get approved for loans and get lower interest rates on those
loans. Those with lower rates are often turned down for loans or
subjected to high interest rates that make it more difficult for
them to successfully pay those loans off. Because of this, it’s
important for you to both understand your credit score and work
towards improving it. You also should know that you are entitled
to check your credit score with all three of the major credit
bureaus once a year.
Your Credit Score May Fluctuate
If you’re like most Americans, your credit score will change
over the course of your life for a variety of reasons. For
starters, most young people in this country do not have high
credit scores simply because they have never had to apply for
credit before. Therefore, it’s important for young people to
find small ways to establish credit. While they certainly need
to understand the risks involved with taking on a credit card,
these are great ways to establish credit when used properly.
Once a person has credit though, there are a variety of ways to
keep a credit score high. Here are several of the ways to raise
your credit score:
Make sure you pay your bills on time: The most important way
to keep your credit high is to make sure you stay current with
all your outstanding debt and pay bills on time. While most
creditors will not report you to the credit bureaus on your
first offense, they are certainly entitled to report you anytime
you do not take on the responsibility of pay your bills.
Keep three to six open credit accounts at all times: The only
way to prove that you can be responsible with debt is to
actually have some debt or at least keep lines of credit open.
By keeping credit accounts open and paying your bills on time,
you can raise your credit score.
Have more than one loan: The only way you’re going to
prove that you can responsibly handle debt is to keep some
around. Paying off all your
debt may
seem appealing but learn to balance your debt and keep some
without burying yourself underneath of it.
Keep your credit card balances low: While you do want to
maintain a certain level of debt, there is such thing as too
much of a bad thing when it comes to your credit report. Pay off
your credit card debt as often as possible in order to keep it
low.
Keep a record of your credit use: As you continue to grow
older and open new lines of credit, don’t lose site of your goal
of improving your credit. Continue to keep records of all the
credit you use so that you can see how to maximize your credit
by using specific types of credit throughout your life.
Keep your credit accounts open: Most people are,
understandably, concerned with debt. So once they pay off a
credit card, they close the account. However, this isn’t
actually good for your credit score. Rather, learn how to use
the card responsibly and keep the balance low.
Avoid too many new credit applications: Applying for credit
often is one surefire way to lower your credit score. Just like
asking too many people out on a date can tarnish your
reputation, asking too many creditors for money makes you look
like you need money more than you actually might need it. Keep
your applications to a minimum.
How To Improve Your Credit Score
Video: Tips on How to Raise Your Credit
Score
Now that you know a little bit more about your credit score,
watch this video to see how you can go about improving it. It
details different things that you can do to strive for the
optimum 720 credit score.
Learning More About Your Credit
By now, you should have a good sense of just how important your
credit score is and how crucial it is for you to maintain a high
credit score for the sake of your financial future. However,
during the course of your life, you’re going to need to
constantly keep yourself in tune with exactly what you credit
score is. Check this handy resource list of direct phone numbers
for companies who can help you figure out your credit score and
improve it.
Your
credit score is important. How important? Well, let’s put it
this way: If you’re interested in buying a house one day or
applying for a loan to go to college or even doing as simple as
trying to sign up for a new cell phone plan, you need to know
about your credit score. You need to know what it is, how high
it is and what it entitles you to. If your credit score is low,
you need to work to improve it. If it is high, you need to know
how to keep it high over time. Essentially, your credit score is
everything a potential creditor wants and needs to know about
it. It lets them know whether you’re the sort of person who pays
bills on time or whether you’ve ever defaulted on a loan. Think
of it as a reference on your resume when you apply for a new
job. And then think about the fact that 
Credit
scores range between 300 to 850 with the higher numbers
representing those people who have a higher and better credit
score than those with lower scores. However, you need to
understand exactly how the major credit bureaus Equifax,
Experian, and TransUnion come up with these numbers in order to
see why the number you have is so important. Your individual
credit score is calculated by using mathematical formulas that
take your current payment history into account as well as your
debts and past debts, credit history and inquiries by creditors, employers and others into your
credit report. These formulas produce your credit score, which
is then used by creditors to determine whether or not they are
willing to lend you money. Good credit scores are typically
above 680 and those people who have good credit scores usually
get approved for loans and get lower interest rates on those
loans. Those with lower rates are often turned down for loans or
subjected to high interest rates that make it more difficult for
them to successfully pay those loans off. Because of this, it’s
important for you to both understand your credit score and work
towards improving it. You also should know that you are entitled
to check your credit score with all three of the major credit
bureaus once a year. 
