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How to Improve Your Credit Score

August 19, 2019
laptop with credit score

Tip of the Week

Try to improve your credit score by paying bills on time and paying down debt.

3 min read

Your credit score is a key part of your financial life. It determines how much credit you can get, the interest rates you pay on your loans, and how much it might ultimately cost you to buy a house or a car, among other things.

A lot of information about your financial habits goes into your credit score. That includes whether you pay your bills on time, whether you’re using too much of the credit you have available to you, and the length of time you’ve had your credit accounts and loans open.  But credit scores aren’t fixed in stone. They can change based on how responsible you are as a borrower. So, if your credit is bad, there are things you can do to improve it.

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What is credit score?

Credit Score

A point-based rating system that assesses how responsible you are with loans and debt over time.

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Tactics and considerations:

You can learn more about credit bureaus and how to get your credit report here.

Good to know:  Credit scores were developed by a company called Fair, Isaac Co., and for that reason, they are sometimes referred to as FICO scores. Credit scores run from a low of 300 to a high of 850, which is considered perfect credit. A score of 670 or above is considered good credit.

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What is credit report?

Credit Report

A credit agency file that contains information about your loan and credit account history.

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Example:

Credit Utilization Ratio

If you have a credit card with a credit limit of $400 and another with a limit of $600, you’d have total available credit of $1,000. Let’s say you owe $300 on one card, and $100 on the other. You’d owe $400, and your credit utilization rate would be 40%.

Try to get your credit utilization rate under 30%, or $300.

$1000 x 30%=$300

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What is credit limit?

Credit Limit

The maximum amount you can borrow on a particular credit card.

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By Stash Team

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