4 Steps To Recognize Credit Score Trouble
How would you know if your credit score is in trouble? Are there signs? Yes, there are signs that you are either in trouble or headed that way.
Are there steps you can take to correct credit score trouble? Yes, once you know what your credit score issues are there are steps you can take to improve your credit score.
Having a low credit score is expensive. With a credit score between 300 to 750, you will be charged more for services rendered from creditors, lenders, insurance companies and utility companies.
A credit score between 750 to 850 is considered by the financial industry as a good credit score. A score of 850 is a perfect score.
Signs Of Credit Score Trouble
#1 – You Always Pay Bills Late.
If you always seem to be paying your bills late, you may have credit score trouble. Set up your bills on automatic payment plans to help avoid paying your bills late. Late pays incur unnecessary fees plus lower your credit score.
#2 – You Continually Miss Payments.
If you just cannot seem to make all of your payments, you may be headed towards credit score trouble. Work with your creditors, let them know that you are aware of some financial troubles and want to work out some payment plan with them.
The inability to keep your payments current, may be another reason to set up your bills on an automatic payment plan.
#3 – You Carry Credit Card Balances.
High credit card balances are a bad sign; it means you could be over extended.
#4 – You Spend Up To Your Credit Card Limits.
Another sign of possible over extension is if you are spending up to your credit card limits. Change your financial habits to spend on needs instead of wants. If you cannot afford it – don’t buy it.
What Determines Your Credit Score
If you are aware of the factors that make up your credit score, you can focus on the areas that you may be weak in. Different factors have a different percent value, so some factors are more important than others.
Your Payment History
35% of your credit score is determined by your payment history; which is why you want to avoid paying bills late or missing payments.
Your Credit Utilization
30% of your credit score is determined by how much of your allowed credit you use; which is why you want to avoid spending up to your credit card limits.
Length of Your Credit History
15% of your credit score is determined by how long you have had credit. The longer your history of using credit the better.
Your Credit Mix
10% of your credit is determined by the different types of credit used by you. Credit cards, loans, short-term loans, long-term loans are all different types of loans.
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