Why is a Credit Score So Important?
In today’s economy, many Americans suffer from poor credit scores and in many cases they are uncertain how to fix this. Fortunately there are many excellent ways to begin climbing out of the nasty credit problem many of us are suffering from. It takes a few things and sometimes a change in your spending patterns is necessary if you are serious about fixing your credit score.
Before I divulge the tricks of raising ones credit score let us first discuss how one obtains a low score number. It usually begins with missing payments, have your cards maxed out a large majority of the time and applying for more credit cards and not getting approved. While some of these make sense why it would negatively impact your score some may have you asking yourself why it would do such a thing. The reason is because it’s all placed into a complex equation that takes in all of your credit history and produces that number based on your predicted risk. So now that I have discussed a couple of the ways you are able to lower it, let’s get down to business and talk about how to raise it.
The best and sure fire way to raise your credit score is to begin making payments on time and if at all possible make more than one payment a month on your loans and credit card balance. It essentially shows that you are responsible with your credit management and it will slowly start rising. Another great way to boost your credit score is to maintain revolving credit on your cards.
Make sure when you begin to take steps in repairing your credit score that you don’t go and immediately start canceling all of your credit cards, this can actually lower it too, so if you are adamant about eliminating all of your cards, do it slowly over time to avoid a score penalty.
Unfortunately, it is much easier to ruin your credit score than it is to repair it, not only that, it takes a decent amount of time. So it is worth mentioning that another thing you must do is have patience. Understanding that it doesn’t happen overnight will allow you to keep your mind at ease while you do everything you can to keep it going up.
Benefits of a High Credit Score
So after you begin reading this you might find yourself asking the question “why do I need a high credit score?” The answer to that is simple…it helps you get loans for whatever you need. You will have a better safety net in the event you or one of your family members has a dire emergency where, without credit, you would be in a seriously bad financial situation. A high credit score opens up many doors in today’s society. It can safeguard you against high APR’s and ensure that you are ready if a financial disaster should ever fall on you.
It is important to follow the easy steps listed above such as paying your bills on time, limiting your credit applications and understanding the different aspects of your credit history. Just remember, credit is not build instantly, it takes a lot of time to accumulate and can all be ruined very quickly. It is a very delicate process but with time and patience you can raise it to whatever you want!