Personal credit score is an indicator on how fiscally responsible you are. The numbers are ranging from 301 to 850 and it is essential in evaluating your financial health. From landlords to banks, employers to small business loans lenders use personal credit score to determine how high is the interest rate that you will you get or how big is the risk to have you as a debtor. Hence why lenders always looking at both your business credit score and personal credit score on their evaluation before giving you the capital.
There are some factors determining your personal credit score, which are:
Payment History — your punctuality in paying your bills
Outstanding Debt — how much of your available credit you’ve used, and how close your card balances are to their limits
Length of Time — how many years you’ve been building credit for
New Credit — opening new credit accounts and hard inquiries can negatively affect your credit score
Types of Credit — experiences with different types of credit can positively impact your score
To boost a good personal credit score to meet the above criteria, here are some tips you can apply to yourself:
Always pay your bills on time.
Paying your bills on time will account for 35% of your credit score Never ignore a missing payment, because the longer you put it off, the more suffer your credit score will be.
Monitor your credit report.
Major credit unions like Equifax, Experian and Transunion give us one free annual credit report. By monitoring our credit report, if we find an error, we can report it and in turn, the correction could increase your credit score.
Control your debt.
Lending organization want to make sure that you are able to repay your debts or overextend your credit. The rule is to try to use less than 30% of the total credit available to you.
Manage your new credit with care.
Adding new account within a short period of time has a temporary negative effect on your credit score. With that in mind, lenders will pay attention to any new credit you add and it will raise a red flag when you try to apply for loan.
That being said, if you diversify your type of credits, such as applying for a different form of credit or buying something on installment, and you can actually make the payments, this can improve your credit score.
Credit card activities.
One of the best ways to build up your credit score is by paying off your revolving credit as well as installment loans. Additionally, even though using only one card sounds easier, a history of having two or three good record credit histories is also a great way to increase your score. Don’t forget, closing an account will not take it off your report.