Building Your Credit Score

Building Credibility

    Maintaining financial stability is essential in many aspects of your life. A good credit score helps you earn that stability and reach financial independence. A credit score represents your creditworthiness based on your history of transactions. 

    There are several things that can affect the status of your application for a mortgage. Lenders will look at your employment status, income and credit score to see whether you are qualified for a loan. Having a good credit score can help you get lower interest rates and increase your chances of getting approved.

    In general, a credit score gives an idea of how responsible you are with money. The higher your credit score is, the better. Poor credit scores range between 300 to 574, below average is 575 to 659, fair is 660 to 719, good is 713 to 740 and excellent is 741 to 900. A credit score is calculated based on your payment history, credit utilization, credit history, credit mix and credit checks.

Payment History

    Your payment history consists of how often you make payments on your credit cards, loans and other accounts on time. Having a good payment history helps build a strong credit score. Missed or delayed payments will be reflected in your credit report which lenders will review.

Credit Utilization

    Credit utilization is the rate of how much credit limit you have compared to how much credit you are using. A low credit utilization rate can drive up your credit score while a high credit utilization rate can bring it down. Having a high credit utilization may give lenders the impression that you are financially struggling. 

Credit History

    Credit history is the compilation of all your accounts from your oldest to most recent. This shows how long you have had credit establishments. A long history of credit accounts can boost your credit score and build strong credibility over time. 

Credit Mix

    Credit mix is the different kinds of credit accounts you obtain, from credit cards, phone plans to car loans. Having more than one credit account with regular payment history gives a good credit miz which can strengthen your credit score.

Credit Checks

    Credit checks are how often your credit report is reviewed for different financial purposes. Each application to financial products, lenders pull your file and each time they do, it is reflected in your credit report. 

Building Credit Score

Check Credit Report

    Credit reports reflect your credit score and history. You want to check your credit report every so often, maybe every year, to ensure that no mistakes are reflected and it presents an accurate history of activity, your accounts. Check for any incorrect late payments, negative records, and anything that affect your credit score badly.

Get a Credit Card

    Credit cards are often abused by owners but when used smartly, it can help establish a great credit score. Getting a credit card is one other great way to build your credit. Each credit card holder is given a credit limit in which the owner is only allowed to borrow or use. The amount used will be paid regularly with interests being charged for outstanding balances. A credit limit depends on the loaner and the borrower of the credit card. The smarter you use a credit card, the higher your credit score goes.