Credit Scores: How Do You Grade?

Credit Scores Affect Your Life

Your credit score might be one of the most important numbers in your life. Especially if you’re thinking about buying a home, leasing a car, getting a loan, or even renting a college apartment. To qualify for these things, companies will want to take a look at your credit score.

But why is this number important? Well, a low credit score can keep you from getting the things you want and need. If you don’t meet the requirements of a company, they might reject you when you apply for something. The reason for this is that companies want to be absolutely sure that you will be able to pay back your loan, pay off your car or home, or pay your rent on time. It’s easy to understand if you put yourself in their shoes — if you were letting someone borrow something valuable of yours, would you loan it out to just anyone? Probably not. You’d want to give it out to someone whose trust and responsibility had been proven.

Like apartment ratings for our industry, credit scores tell someone, if you have a high credit score, that you have proven yourself as a borrower. And if you have a low credit score, it tells someone you might have made some mistakes. Things that can lower your credit score are missing credit card payments, paying bills late, or opening too many credit cards, for example. The best way to have a high credit score, according to industry experts, is to pay your bills on time.

Credit Score Details

Credit scores range from 300 to 850, with the best and highest credit report score being 850. If you have a credit score lower than 620, you are labeled high risk and therefore might have a hard time getting loans or approved for credit accounts.

Credit Score Tips

But whether your credit score is low or high, it’s important to keep tabs on it. Every year, consumers can order one free copy of their credit report from each of the three credit bureaus. From this, you’ll be able to see how many accounts you have open, inquiries made to your credit and more.

It’s important to look at this credit report to be absolutely sure no one has opened any accounts in your name without you knowing. You can also keep an eye out for information that is not supposed to be included on your credit report. For example, a family member with the same last name as yours might have some of his or her information on your credit report. These kinds of mistakes could negatively influence your credit score, so keeping an eye out for them is necessary.

Daily Credit Scores

There are also a number of services that monitor your credit score more closely, including some companies that will run daily credit scores for you. For most consumers, a daily credit score service is overkill, but if you’re in an ongoing battle to remove a lot of black marks from your credit score report, you may find such a service useful to see what kind of progress you’re making. The credit agencies try to maintain accurate information, but change takes time and each modification to your credit score report requires proper documentation to prove that you’re correcting actual mistakes.

Get a Higher Credit Score

How do you get a higher credit score?

• Pay your bills on time.
• Don’t overextend yourself – your credit score reflects how well you stay within your means. If you’re barely making ends meet, your credit score will be low, even if you’re not missing payments.
• If you’ve defaulted on any old debts, like a college loan or a renters insurance bill, make sure to contact the lender and set up a payment arrangement to clean up the debt.
• Get a copy of your credit report from all three credit bureaus and contact them if you find any mistakes.
• If you have trouble keeping to a budget, help your credit score out by cutting inessential regular expenses. Drop premium cable television for your apartment. Find a cheaper cellphone plan and use a landline for longer calls. Don’t eat out as often. Take the bus or bike to cut your gas bill. Your credit score will thank you!
• If necessary, sign up with a service that sends you your credit score on a regular basis – even daily credit scores in extreme cases.
• If you know you’re going to miss a payment, contact that lender before the problem hits their records and let them know what’s going on. Try to set up a payment plan so you don’t show up as a credit score offender.
• If you’re turned down for credit, the law allows you to request a free credit report even if you’ve already received a free report for that year. Request the additional credit score report and find out why you were turned down. If it’s a credit score mistake or a forgotten debt, clean it up.

Taking these steps should help you get a higher credit score… and getting a higher credit score will forestall any ugly misunderstandings the next time you are buying something hefty or working on finding an apartment.

Take care of your credit score, and it’ll help take care of you! Happy borrowing!