How Is Your Credit Score Calculated?
How is your Credit Score calculated?
Getting approval for any type of loan depends on your credit rating. You credit score usually rates between 350 and 850 and the lower your score is the higher your interest rate will be. Don’t get me wrong, you can get what you want / need in life but is it worth paying $500.00 extra in interest on a $1,000.00 loan or paying $200.00 of interest on a $2,000.00 loan?
Make sure that you make your payments on time if possible before the end of grace period if it’s part of the service because a late payment will affect your credit score adversely. Even though you may have paid the account but if it is being paid past 30 days it is still being reported as late and you are still wasting money.
Whenever you want to apply for credit make sure that you don’t apply for it too often. Credit reporting agencies may score you low as it means that you can’t live without credit. In so many words, don’t be desperate for credit because whether you want it or not…. IT’S YOURS!
Another thing that reporting agencies consider in scoring you is outstanding balances on your credit. If you are the type of consumer that often exceeds your credit line, you are a LIABLITIY and it could tarnish your relationship with the lender before it even gets started. So, make sure you don’t exceed 30% of your available credit as it doesn’t make sense financially to max out your card because you still have no credit. Think about it like this, if your cards are always maxed out, you have no credit putting you back in the hole as to why you got the loan or card in the first place.
Just a Few Tips
I definitely know that you are grown, but track what you do, consider your ways of spending, and create spending limits.
Tracking your expenses provides a great reality check as we create our budgets. We might say we only spend a certain amount on a line item however, when we review our bank statements, credit cards and other payment methods, we quickly realize we spend a whole lot more!
Tracking will help us identify the problem and create a solution because we don’t want our loved ones cleaning up our debt if something happens and especially if they are cosigners.
Creating spending limits allows us to see what we can afford and could motivate us to take on new career opportunities because we don’t make enough.
In the credit game, you have to know when to move and when to stop but you also need to know when enough is enough.