If you've been turned down for a loan or worry about your credit score, this guide will enlighten you as to how that number is calculated.
You will need
- Credit cards
- Different types of credit
- Internet access
Step 1 Learn the scale Learn the credit card scoring scale, which ranges from 300 to 850. A high number shows you are a good risk while a low number shows you are a bad risk.
Step 2 Avoid late payments Avoid making late payments or missing a payment — this accounts for 35 percent of your credit score.
The amount of money you make is not a factor when calculating your score.
Step 3 Avoid maxing-out an account Avoid reaching the limit on an account. The amount borrowed versus your limit accounts for 30 percent of your credit score.
Step 4 Stick with an account Stick with one or two cards. The longer you have had a single credit card the better, and it accounts for 15 percent of your score.
While there is no quick way to boost your credit score, paying off cards, closing multiple accounts, and making payments on time can slowly improve it.
Step 5 Pass on new accounts Pass on opening credit accounts for a one-time discount. Loyalty and good financial decisions account for 10 percent of your score.
Step 6 Mix up types of credit Mix the types of credit you have, such as cards, loans, retail accounts, and mortgages. This is another 10 percent of your score.
Step 7 Check online Check your score online for mistakes. Nearly all banks and financial institutions report millions of purchases, payments, and other information every day.
Did You Know:
In 2010, the U.S. national debt totaled $12 trillion, or about $40,000 for each citizen in the country.