When applying for a personal loan, car loan or mortgage, a good credit rating is essential. Credit agencies like to see that you are responsible when it comes to managing your debt. One example is that a young person might have only one credit card. A 40-year old could have a mortgage, car loan and multiple credit cards. It is also important to avoid opening new credit accounts because they will lower your score. Although a new account may result in a hard inquiry on credit reports, it will usually disappear within one-year.
Recent college graduates have a good credit score
Many financial milestones await college graduates in their adult lives. Many of these milestones are difficult to achieve if you don't have a credit history. Your credit history will be a major factor in the decisions of many lenders, insurers, employers, and other parties. It is therefore important to build a strong credit score as soon as possible. Bad credit can make it more difficult to obtain large loans, good car insurance rates, or even get utility service.
For recent college graduates, the average credit score is 689. This is a score that is 12 points below the national average. This is a great score for young people. However it will cost you more to get into the higher tiers.
For a great credit score, you need to keep your credit utilization low
One of the best ways to improve your credit score is to keep your credit utilization ratio low. This can make you more attractive to lenders and help you get better rates and larger loans. This is a great place to start. Keep your credit utilization down to 30 percent. It is not a perfect science.
Credit utilization is how much of your credit is being used. It is responsible for 15 percent your FICO score. A good score is achieved by keeping this ratio below 30 percent. The best way to reduce your utilization is to apply to a credit-card. This will also boost the total credit limit.
You can also improve your credit score by paying off your credit cards in a timely manner. Your credit utilization percentage is what lenders use to determine your repayment risk. High credit utilization rates indicate that you might be more likely to spend than you should, while low credit utilization levels show that you are responsible with your credit.
Increase your credit score by practicing responsible financial behaviors
One of the best ways to increase your credit score is to practice responsible financial habits. You must pay your bills on-time and maintain a low credit utilization ratio. Also, you should avoid opening new credit accounts. You can improve your credit score quickly by being responsible. You may see a rapid decline in your credit score if your payments are late.
Your payment history is responsible for 35% of your credit score. This means that it is critical to make timely payments. This will demonstrate to creditors that your repayment history is accurate and that you will adhere to the payment deadlines. You must make every payment on your credit card on time. Your credit score will be affected if you miss even one payment. Don't miss a payment. Make it right away.
Your credit score is the number used by lenders to determine whether they will lend you money. Your score ranges from 300 to 850, and it can be impacted by different factors. Late payments can cause a drop in your score of up to 30 percent. But, paying off a collection account doesn't erase it from your credit score. In fact, it will stay on your report for seven years.