Factors that Affect Your Credit Rating

Several different things come into play with credit scores. The length of your credit history matters a lot. The longer your credit history is, the higher your rating is likely to be. The amount of debt that you carry has a profound impact on your score as well. If you have maxed out most of your available credit, for example, your score will plummet. Above everything else, however, your payment history can make or break your credit score. A single late or missed payment can send your score into a tailspin. Collections efforts and court judgments from creditors should be avoided at all costs as well.

Improving or Maintaining Your Credit Score

There are a few different credit rating scales. The FICO scale ranges from 300 to 850. Scores of 700 and higher are considered to be quite healthy. If yours is well below that, you would probably like to improve it. Get copies of your credit reports from the three major bureaus. Dispute inaccurate information that may be affecting your score. Pay off old debts so that they drop off your report. Pay down high credit card balances. From here on out, pay every single bill on time. The process may not be fast or easy, but it will pay off in the long run.

The Benefits of a Good Credit Rating

With a good credit rating, you’ll be able to get the credit you need. Lenders will happily give you car loans, home loans and other forms of credit. In addition to qualifying for the loans that you need, you will enjoy more favorable terms. You should be able to avoid annual fees, and your interest rates should be a lot more competitive. A strong credit score will save you money.

The Bottom Line on Credit Scores

At the end of the day, having a great credit score is extremely important. With that being said, a bad credit rating doesn’t necessarily put your out of the running for loans, credit cards and other forms of credit. There are lenders out there who are willing to work with people who have poor credit scores. That’s especially true in this tough economic climate. Don’t throw in the towel without investigating all of your options. In the meantime, do what you can to strengthen and improve your credit score. Before too long, you will be able to qualify for the loans that you need.

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