Why you should take control of your credit score.
Your credit score tells a lot about you and your spending patterns. It helps lenders determine whether or not you qualify for a loan.
Simply, a credit score is a summary of your credit and repayment history. The numbers are not pulled from nowhere.
Your score depends on your financial actions - amounts owed, payment history, length of credit history, new credit, types of credit used. If someday you want a home, auto, student, or personal loan, take control of your score. Establish good credit, and reach your financial goals.
How to take action and control your credit score.
1. Avoiding credit cards will NOT help your credit score. Credit cards are one of the best way to prove your ability to manage your money responsibly.
2. If you don't trust yourself with a credit card, use a share secured credit card. Your credit card is secured by a deposit. For example, a deposit of $500 in your account equals your credit limit. You can't get into financial trouble if you use the card responsibly.
3. Manage your credit utilization rate. The rate represents a ratio that lenders pay attention to because it reflects how risky or responsible you are with handling credit. This number is the ratio of your total credit card balances to your total credit limits. For example, a ratio of 85% may suggest you are financially unstable because you are spending a lot of money that you don't have. Alternately, a utilization rate of 0% may reflect negatively since you need active credit management in order to build credit. The bottom line? Stay under 30% of your available limit at all times each month.
4. Don't stay in debt, make monthly payments right away! Letting your payments build up until the end of the month is a good way to start a bad habit.
Where can you go for more tips on handling your credit score?
Take control, and manage your money responsibly to build a strong financial future!