Before you apply for a new credit, try as much as you can to understand your credit score. You will need to perform a score check in order to know what is your creditworthiness. This will help you in maintaining a healthy credit report.
In the first place, there is a huge difference between your credit report and your credit score. Some lenders will look at these documents before issuing you a loan.
The FICO score or credit score ranges from 300 to 850; the 300 is the worst while 850 is the highest or best. Keep in mind that some creditors like GE Capital Retail Bank have their own way of calculating a credit score.
For instance, if you apply for a credit score, and they say that yours is 490, you will discover after you check your credit that it is within the range of 200 to 620.
Before your credit score is calculated, you must take lots of factors and values into consideration. Some of the key factors include your spending habits, resources for monitoring your credit score, and useful hints for maintaining a reliable credit score.
Pay off some debts: If you have any outstanding debts, try the much you can to pay them off. Make timely payments: pay all your bills on time; keep in mind that bankruptcies, defaults, and late payments will really take some time before they clear off from your credit report. The sooner you start doing this, the better for you. Keep checking your credit report: it is common to notice some errors in your credit report. If you notice any error, do not waste time in reporting it to the appropriate department.
Clear off your credit cards at least within one month: this will help you not only to get better rates, but also improve your score.Seek a professional advice if you are having issues with making ends meet. Do not increase credit limit by opening new credit cards, instead concentrate on opening accounts that you will be ready to keep for a long period of time. These remarks will remain in your account even if you close the accounts, or after paying the debts.Maintain your old accounts, and close new ones.
Building an excellent credit score takes lots of time; people with excellent credit scores are responsible card users and pays all their dues on time. This is the main reason why they receive lower interest rates.