Improving your credit can happen instantly

Posted By: Matt in Credit on 01/07/2016 at 07:45:13

How important is your credit score· Furthermore, how important is your credit score to you·

The truth of the matter is your credit score is quite important and as far as how you view it, your credit is how you're judged when it comes to borrowing money or being issued a line of credit.

Yes, those three numbers, bunched together, is going to tell a lender, bank or underwriter specifically just if you're competent enough to be given money.

So how exactly do you ensure a good credit score·

You don't take on too much debt, and that debt doesn't butt up against your income. You should keep your debt to income ratio at 30 to 70, with those same lenders being able to pinpoint exactly the fact that you make plenty more per month then what you are putting out in expenses.

You also need to learn to pay your bills on time, and not skip payments, miss payment days or pay late. Yes, the grace period is there for a reason, but even that is a slippery slope as far as being later and later each month with your payment.

The bigger question than how to get a good credit score might be wondering how you can improve a score that is struggling to stay afloat some where between average and good, hoping it doesn't drag down to poor or paltry.

To improve your score quickly, you can focus on two things right away: if you have anything that is late, pay it immediately and if possible (and if it is a situation where it is in collection) pay it off in full.

That isn't always possible, but the less your debt is versus what the balance is makes you much more attractive to creditors and lenders. If you have a credit card balance of $4,900 and the limit on the card is $5,000, chances are you'll be viewed as a liability. Those high balances, even if you pay on time, put a ceiling on how much you'll be able to borrow, so the safe bet is to be at about 50 percent on credit ceiling versus what is on the card or line of credit at the moment.

Your credit score isn't necessarily a make or break, all or nothing number, but you'd be lying to yourself if you believed a poor one wouldn't be a huge roadblock to having what you want in the form of credit and more importantly getting a loan for what you need, such as a house or car with an interest rate that is lower or higher based on how good or bad, respectively, that score is.


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