Follow These Steps to Improve Your Credit Score | Richard Banks & Associates, P.C.

If you are working to get your financial situation back on track, chances are you will be monitoring your credit score closely. Seeing your credit score improve is an excellent sign that you are on the right track and moving toward financial wellness.

Credit Score Basics

What you really need to know about your credit score is that it exists to serve as a numerical representation of the amount of risk you present to a lender. Higher scores equal less risk. It is common for many to go by the FICO credit score, but you will also see scores from Experian, Equifax, TransUnion and VantageScore. For the most part, the scores range from 300–850, while Experian and VantageScore operate at 330–830 and 501–990 respectively.

Typically, a credit score of 700 or above is considered good and scores of 800 or above are considered excellent. According to Experian, most credit scores fall between 600 and 750.

Why Credit Scores Matter

While it may not seem fair to have your financial character and ability to get loans based off of a calculated number, it is how the system works. You can think of your credit score as a financial report card of sorts.

If you are interested in becoming a homeowner or buying a new car, your credit score will 100% play a major role in that process. Remember, the better your credit score, the safer you appear to lenders and that means you could snag their best rates.

Things That Impact Credit Scores

There are many factors taken into consideration for your credit score, and all of those can be found on your credit report. Included in your credit history are:

  • Payment history for loans and credit cards, including the number of late payments
  • Credit utilization rate, which is how much credit you have available and how much is being used
  • Total debt
  • Type, number and age of credit accounts
  • Bankruptcy
  • Number of credit report inquiries
  • New credit accounts opened

Ways to Improve Your Credit Score

If you’re not satisfied with your current credit score there is good news: You can take steps to improve it! Our credit scores are fluid and improving them can be done through the following suggestions:

  1. Keep balances low on your credit cards and revolving lines of credit.
  2. Pay off debt instead of moving it around.
  3. Don’t open new credit cards that aren’t needed.
  4. Set due date alerts on your phone or automatic payments to eliminate the risk of late payments.

Increasing your credit score doesn’t have to be a daunting task, and the steps taken to improve can also help your financial situation. If you are unsure of what to do with extremely high levels of debt, you can always talk to us about bankruptcy options.