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Everyone talks about credit scores,
and how important they are
to every aspect of your financial profile,
but not everyone understands how the process actually works.
Here are five tips for improving your credit score,
from the loan specialists at VA Mortgage.com!
Your credit score is a three-digit number,
generally ranging from 300 to 850.
A higher score means that you are a good credit risk,
and will probably qualify for lower interest rates on loans.
Here are five things you can do to increase your credit score.
• First, the best way to improve or maintain good credit
is to pay your bills on time.
Your payment history affects about 35% of your score,
so it's important.
• Make sure you check your report annually,
because one out of every four credit reports
contains a serious error that will hurt your credit.
Finding and correcting such errors
is a big factor in keeping good credit.
• Develop a credit history by getting a credit card
and paying it off responsibly.
Just charging as little as $20 a month
and paying it off monthly over six to eight months
is a great way to establish credit.
• However, it's important to keep your credit balance low -
at 30% or less of your credit limit.
Maxing out your credit limit will hurt your score.
• Finally, lenders like to see
that you can manage different types of debt -
from major credit cards,
retail store cards
and installment loans like a car loan.
See our second credit score presentation for five things
that will drag your score down.