Your credit score is very important when it comes to being able to obtain loans. Scores will range between 300 and 850. A higher score of 700 to 850 will give you lower interest rates on a loan. A credit score will accumulate between 6 months and 1 year. If you find yourself with a lower credit score, then you will struggle to get a desirable rate. This means that any auto loan, mortgage or personal loan, will have a higher interest rate. This higher rate will make you pay more money in the long-term. This also means that loans could be harder to get approved.
Your credit score can be affected by many things. Every single debt that you incur will affect your credit score. This means that if you open up any credit cards, auto loans, signature loans, or even students loans, then your score will be affected. If you don’t pay these things on time, then your score will suffer, which is why it is important to pay your debts on time. Also, every time you get someone to pull your credit report, then your score will go down by 5 points.
If you just pay the statement balance, then that is not enough to increase your credit score. You also have to make sure that your credit usage is less than 50%. If your credit limit is $500, and you paid your statement off, but you used $370 of your credit limit, then this is a 74% credit usage. If your credit usage is high like this, then your credit score will drop, even after you have paid off your statement balance.
Pay off your debts on time and make sure that your credit card usage is less than 50%. The easiest way to do this is to use your credit card for every time you go to fill your car with gas, or any smaller purchases.
To check your credit score, you should go online to Experian, Equifax, or Transunion. These are credit reporting companies that can show your credit score. Your FICO score is all 3 of these companies’ scores averaged out into 1 score.