You have a big purchase coming up in your life. Maybe it's a house or a car. Maybe it's that big screen television you've been eyeing for months. Whatever the case, you need financing for it. There's no worse feeling in the world than to apply for a loan or a credit card, only to find out you've been rejected on the basis of a low credit score.
A credit score under 620 will make it very difficult for you to find someone willing to lend you month in any capacity. You can very easily work to improve a score under 620, though.
The first thing you should do is request a copy of your credit report, so you'll know what your score is. Your credit report also shows all the lines of credit you have open. This is a great way to see what might be affecting your credit, as well as checking for instances of identity theft. All you have to do is look for lines of credit you didn't open and dispute the charges, if any have been left unpaid. If successful, this will go a long way to improving your credit score.
Pay down some of your highest balances on credit cards if you have the means to do so next. Only making minimum payments is a mistake many people make. Interest adds up quickly, however, with interest rates increasingly in the 30% range. Making minimum, double digit payments on three or four digit balances is a trap you don't want to fall into. Only paying the minimums is the quickest way to see your credit card balance get out of control. Plus, it goes a long way to improving your credit score if you keep your credit card balances below one-third of your credit limit on each card.
Lastly, the older your credit history, the stronger it looks from a lender's perspective. If you have old credit cards you haven't used for a long time, however, you may not receive credit for your full history of on-time and responsible payments. After awhile, old, out of use credit card accounts stop being shown on your credit report. If they're not shown there, it's as if they never existed at all to lenders. Putting a small balance on old cards is consequently yet another sure-fire way to improve your credit.
A credit score under 620 will make it very difficult for you to find someone willing to lend you month in any capacity. You can very easily work to improve a score under 620, though.
The first thing you should do is request a copy of your credit report, so you'll know what your score is. Your credit report also shows all the lines of credit you have open. This is a great way to see what might be affecting your credit, as well as checking for instances of identity theft. All you have to do is look for lines of credit you didn't open and dispute the charges, if any have been left unpaid. If successful, this will go a long way to improving your credit score.
Pay down some of your highest balances on credit cards if you have the means to do so next. Only making minimum payments is a mistake many people make. Interest adds up quickly, however, with interest rates increasingly in the 30% range. Making minimum, double digit payments on three or four digit balances is a trap you don't want to fall into. Only paying the minimums is the quickest way to see your credit card balance get out of control. Plus, it goes a long way to improving your credit score if you keep your credit card balances below one-third of your credit limit on each card.
Lastly, the older your credit history, the stronger it looks from a lender's perspective. If you have old credit cards you haven't used for a long time, however, you may not receive credit for your full history of on-time and responsible payments. After awhile, old, out of use credit card accounts stop being shown on your credit report. If they're not shown there, it's as if they never existed at all to lenders. Putting a small balance on old cards is consequently yet another sure-fire way to improve your credit.
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