Your credit score gives potential lenders an idea about how well you have handled borrowed money up until now. A high credit score is an indication that you’re likely to pay your bills when they’re due and it can open doors to better rates and loan terms. A question you may have is “Can a better credit score help me lower my bills?”
What Your Credit Score Means
Credit scores range from 300 to 850. Scores below 600 are considered poor while scores from 601 to 660 are considered fair. Scores from 661 to 780 are good and if your score is over 781, it’s considered excellent.
Lenders use your credit score to determine whether they’re willing to loan money to you, and if they are, a better credit score may help you to be approved for a loan with a better interest rate and terms. If you’ve had credit problems in the past, your application may not be approved, and if it is, you may be charged a high-interest rate. This can lead to a higher payment month to month and you may pay hundreds if not thousands of dollars more in interest over the life of the loan than someone with a good or excellent credit score.
Bringing Up Your Credit Score
If your credit score needs work, there are actions you can take to bring it up. Paying your bills on time is the most important factor in your credit score. If you have any past-due accounts, work on getting them caught up, and commit to paying on time going forward.
Another factor that affects your credit score is credit utilization. This is the percentage of available credit you’re using. If you’re using more than 30 percent of your available credit, it may be hurting your credit score, so paying down your balances may help. Paying down your total overall debt can also help to improve your score.
Avoid borrowing money you don’t need and limit how often you apply for new credit. Whenever you apply for credit, it shows as a hard inquiry on your credit report. Too many inquiries in a short time can hurt your credit.
If you’ve never borrowed money before and have no credit history, you’re considered a risky borrower. You’ll need to establish a credit history. The easiest way to get started is to apply for a store card, a secured credit card, or a credit builder loan.
Checking Your Credit Report
Be proactive about making sure the information on your credit report is accurate. Misinformation such as payments reported as late that were not late can affect your credit score negatively, eventually costing you money in higher interest rates. Check to make sure there are not any duplicate accounts or accounts you don’t recognize. Dispute any errors you find right away, and if you need help with this process, reach out to Dovly.
Dovly is an automated credit repair engine that can help you track, manage, and fix your credit. Try it risk-free with our free membership tier. Get in touch with Dovly today.