Building your Credit Score
Financial institutions look at your credit score to determine how much they are willing to lend you and what kind of interest rates to charge you to borrow money. Having no credit or poor credit could affect you at the worst of times, in situations such as: renting, taking out a loan, buying a home and in some cases getting hired for a job.
What negatively impacts my credit score?
Late payments
Carrying balances on credit more than 35% of the limit (ex. Owing more than $3,500 on a $10,000 credit product)
“Credit Seeking”, meaning out applying for credit at several institutions in a short period of time
Having only 1 credit product such as a credit card
“Credit Seeking”, meaning out applying for credit at several institutions in a short period of time
Having only 1 credit product such as a credit card
How to build, or rebuild your credit score.
Building credit history with long term use. The longer you own a credit product (and keep it in good order) the more your credit history builds
Carrying a variety of credit in good standing, for example having a credit card with little to no balance, a line of credit with a low balance and a car loan.
Make all payments on time. This includes your utility bills; good payments are not necessarily reported to the credit bureaus, but you can expect that late payments will make an appearance and bring your score down.
A healthy credit score will afford you preferential treatment with lenders, it is worth taking the steps to ensure your score is moving in the right direction. If you are unsure of where your score stands, check out sites such as: https://www.borrowell.com/, they provide you with regular updates which won’t negatively impact your score.
