Everyone knows just how important it is to have a good credit score. You may wonder how much of an impact your credit score can have on your life. For example, a good credit score will mean you qualify for the best loans, rates and terms, and thus, will save money gradually through reduced rates over the lifespan of a loan. It can also mean the difference in renting a nicer home. As the Director of Consumer Education Gerri Deweiler sums up about credit score: "An excellent credit score equals money in your pocket."
A credit score of 620 and below for example, would mean that the person looking to borrow would be categorized as a "sub-prime" borrower, whereas a credit score of 720 would mean that the borrow would be eligible for more favorable loan conditions.
Here are some easy-to-apply tips:
- Acquire a credit card from a major company (Visa, MasterCard, etc.). Before you go crazy, it is important to note that using a credit card and keeping a balance on one are two totally different matters. Running up a bill that you don't pay in full won't help you build credit. Therefore, this tip takes discipline, but having a credit card you use and pay off monthly is an easy way to improve a poor credit score. A great way to implement this tip is using a card to pay for gas and paying it off monthly.
- Get a prepaid credit card. If you don't trust yourself to use a credit card wisely or just don't want one, get what's called a prepaid credit card. This gives you a way to use a credit card without the temptation of running up debt as it will only allow you to spend the amount that you have placed on the card and no more.
- Be patient. Although it is difficult, it is important that you understand the process of repairing your credit won't happen overnight. Slow and steady wins the race when it comes to repairing a credit score.
- Check your credit score. It is important to make sure that your credit report is accurate. Therefore, checking the three credit bureaus, those being Equifax, Experian and TransUnion, on a regular basis is wise. You want to know if anything incorrect is on your credit report so you can rectify the situation before it damages your credit.
