Its impossible to overstate the impact your credit score has on your life.
Your credit score is basically just a three-digit number that measures how likely you are to repay your debt.
7 Ways to Make Money if You Hate People
Do you avoid people too?
Tina Russell/The Penny Hoarder
Enough small talk.Here are some waysto earn extra cash, without all of the social stuff.
Did you know?
Eventually, those payments will help to boost your score.
The quickest way to negatively impact your credit score is to miss a payment.
Also, get copies of your credit reports (well explain how later) to look for errors.
Its the second most important credit factor, determining 30% of your score.
Heres an example: Suppose your credit card limits add up to $10,000.
Your total balances amount to $3,500.
Your credit utilization ratio is 35%.
The lower your credit utilization ratio, the better.
A utilization ratio thats too high tells lenders that youre overly dependent on credit.
you’re free to also improve your credit utilization by getting more credit.
If your limit increases but your balance stays the same, your credit utilization ratio goes down.
Try asking for limit increases on your existing accounts.
That means closing an older account or getting a new credit card could have a negative impact.
Your score could also drop if you pay off debt.
Even though youve done something good for your finances, your score could drop in the short term.
How to improve:There are no shortcuts here.
Building your length of credit history takes time.
Think carefully before you close out a card youve had for a long time.
Also included in this category is the number of hard inquiries, which occur when you apply for credit.
But note that the impact is small: It determines just 10% of your score.
How to improve:Dont put too much emphasis on this credit factor.
Its not worth taking out a loan or going deeper into debt just to have a diverse credit mix.
Here are three places you could do so.
To do so, visitAnnualCreditReport.com.
If you find errors, you’re free to dispute them with the credit bureaus.
Still, Credit Sesame helpful in estimating your FICO score and monitoring changes to your TransUnion report.
Robin Hartill is a senior editor at The Penny Hoarder.
It sounds appealing right?
Check it out here!
