How to Get and Keep a Good Credit Score


First let’s define what a credit score is. This score is a number that is used to predict how likely you are to pay back a loan. In mathematical terms, a prediction formula, which is called a scoring model, is applied to the information on your credit report to equal your credit score number. You can have numerous credit score numbers depending on the company and the prediction formula, or scoring model, they use.

Usually a higher credit score number makes it easier to qualify for a loan and can mean a better interest rate, as well. Scores generally range from 300-850. Now, how do we get and keep a good credit score? A recent government study indicated that as many as 40 million Americans have a mistake on their credit report, and 20 million have significant mistakes, according to cbsnews.com. What can a mistake cost you? An increase in the interest you pay on a home or car loan, landing a job, and more. Here are seven tips for maintaining a good credit score.

    1. Request a free credit report annually through AnnualCreditReport.com and check your report for any errors or misinformation.

    2. Dispute any errors on your credit report. Need to know how? Check out our How to Correct Errors on Your Credit Report article.

    3. Pay your bill and loan payments on time, every time. You can set up automatic payments or calendar reminders to make sure you get them paid in full on time.

    4. Don’t just pay the minimum amount if you can afford to pay more. It will take you much longer to pay off debt if you just pay the minimum amount every time. Generally, people with the best credit scores are those who pay off their credit cards in full every month.

    5. Don’t use too much of the credit that is available to you. Credit scoring formulas look at how close you are to “maxing out.” Using too much of your credit could equate to future troubles with repayment, due to how the prediction formulas calculate your credit score.

    6. Don’t apply for a lot of new credit in a short time period, ESPECIALLY if you are getting ready to get a home loan or a car loan. However, when you request your own credit report, or when your creditors check your credit report, those requests to see your credit report should not hurt your score.

    7. The more credit experience you have the better. Credit scores are based on experience over time, so the more time and opportunity you have with getting and paying for your credit, the more information there is for a prediction formula to use.

One further piece of advice – avoid paying upfront fees to “repair” your credit history. Only time can fix negative information, such as late payments. Companies that claim they can help you, may actually get you into trouble by telling you to do something that is illegal.

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