Most of us know that having good credit is important. It can determine whether or not lenders will loan us the money for a house, a car, to go to school or to finance a new venture. Having a higher credit score will also save us a lot of money in interest if we do end up taking out a loan. This is because with a higher credit score, lenders perceive us as less risky and offer us a lower interest rate. Separately, employers may also check our credit score before extending us a job offer.
So how can we maximize or increase this very important number?
The first step to increasing your credit score is to figure out where you stand. How will you get where you want to be if you don’t even know where you’re starting from?
First, you can pull your credit report for free each year at AnnualCreditReport.com. Your credit report is the source of information for your credit score. In the report you should find all of your credit accounts, including credit cards and loans as well as your limits, balances and payment history. Review this information each year to make sure it’s all correct. The quickest way to increase your score is to remedy errors from your credit report. A delinquent loan on your report that isn’t yours would be weighing your score down incorrectly. Having that removed will move you up immediately!
Your credit score can range from 350-850, 850 being perfect. The most widely used credit score is the FICO score and many credit cards are now reporting that score on monthly statements. You can also pull your FICO score from MyFICO.com. For a fee, you can see a breakdown of your score along with action steps to improve it.
Want to learn more? Check out the Tackle Your Debt course where we go in depth on what makes up your credit score and how to maximize it.