A Good Credit Score In 3 Easy Steps
If you are not sure why you pay more for everything you buy but you are tired of it, maybe it’s time to check out your credit score. Having a good credit score and a bad one can make all the difference in how much you pay for everything you buy. Creditors take a good credit score very seriously. If your credit scores are below 750, you must work on improving your credit score, if you want to stop wasting money. With a credit score below 750, you will pay more money on a mortgage or your rent payments, your car and home insurance and even your phone rates.
Your credit score is a tool that financial institutions use to evaluate you. Your credit score represents your credit worthiness. Our credit scores are becoming more important to insurance companies, auto loan companies, mortgage companies, credit reporting agencies and credit card companies. You can save money on your insurance premiums, mortgage loans, auto loans and credit card payments if you can improve your credit score to a number above 750.
Step #1 – Learn The Importance of Hitting High
Credit scores are used by financial institutions to determine how much you will pay for services. Credit scores give credit reporting agencies, insurance companies, lenders, credit card companies, banks and retail stores some idea of your likelihood to make payments on time or to repay a loan. Any credit score below 750, cuts off your opportunities. Financial institutions do not feel you will make timely payments or payments at all. The benchmark of a good credit score that is being used by financial institutions is 750. If your credit scores are below 750, you will pay more, it’s that simple. Credit scores effect how much you pay for not only insurance but also buying a car, a house, a boat, a motorcycle.
Let’s say your credit score is not that good, and you need to buy a new car. You need a loan, right. Well if you do happen to “qualify” for a loan be prepared to pay more, because with a low credit score a bank may give you a loan, but they will protect themselves by charging you more for it. If an insurance company does sell you insurance, you will most likely be paying higher premiums. The insurance industry bases your insurance premiums on your credit scores. Even if your claim history is ideal, if you have bad credit scores you could still pay higher insurance premiums. Also keep in mind that lenders, banks, credit card companies, retail stores, insurance company’s tighten up on credit and loans in a hard economy.
Step #2 – Learn The Key Credit Score Breakdowns
Let’s look at how a credit score is calculated and steps you can take to improve your score.
Your Payment History:
- 35% of your credit score is determined by your payment history
- Always make your payments on time…..insurance payments, loans, credit card payments
Your Credit Mix:
- 10% of your credit score is determined by your credit mix
- Be sure to have a “mix” of credit
- This means that you want to make payments on a few different types of credit
- Making payments on a mortgage, an auto or student loan and credit cards look better to the credit reporting agencies than just making payments on one credit card
- This credit mix shows the credit reporting agencies that you are responsible
Your Credit Limit:
- 30% of your score is determined by the amount of money that you owe each creditor
- Spend below your credit limit
Your Credit History:
- 15% is based on the length of your credit history
- For the best rates on what you pay for things – get to know your credit history
Step #3 – Dig Deep
If you want to change your finances, you will need to dig deep to find out what really matters to you. Ask yourself the questions that could make a difference. For example, do you really care about having extra money? Does wasting money on fees and interest bother you? If you could find a way to spend less and save more, even if inconvenient, would you do it? Your actions determine your credit scores, which in turn determine how much you are charged for goods and services. Change your financial actions, your spending patterns and you could find yourself saving a whole lot of money.