How you can improve your credit score
Your Credit Score
The credit score is also referred to as a FICO Score and is a mathematical formulae created by Fair Isaac and Company.
The credit score is used by most companies to see if you are a good credit risk or not. Equifax and Trans Union will crunch the numbers from the credit report, and spit out a number somewhere between 300 and 900, or even no number or R for Reject. A score over 680+ is considered excellent.
How Scores Are Calculated
How you can improve your credit score
1. Order a copy of your credit report annually, review it carefully and correct any significant errors:
2. Pay your bills on time
3. If you have a questionable credit history, you should open a few new accounts, use them responsibly, and pay them off on time
4. Don’t open accounts then don’t use them. Having 6 or 7 of the same type of credit card does not work in your favour
5. Have a credit card or instalment loan can help boost your score, so long as you don’t have a high balance
6. Keep balances low in relation to the available credit. If the credit limit is $10,000, keeping the balance below $2,500 (or 25% of the limit) will improve your score, balance over $7,500 (75% of the limit) will decrease the score. Going over the limit has an even more negative effect
7. Pay off credit card debt instead of moving it around to lower rate cards. Moving balances to other credit cards and closing out the old account can hurt the score.
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