Credit score is a calculation of 3-digit number which allows the lender knows about the financial status of a person who wishes to get a loan, whether he will be able to pay his or her debts on time. We get this score from the three credit bureaus such as Trans Union, Experian and Equifax, who collect all the information about the history related to your credits in the present and past. They list it on your credit report which is then reflected to the creditors who wishes to see your credit history before lending you the money.
It is important to have a very good score because when the score is high, it becomes easier and cheaper for lenders to lend money and borrowers to borrow money. It can save your thousands of dollars in interest payments.
A credit score around 660 is considered a good score and between 700 and 759 is considered to be great. People who have score above 760 is amazing, enjoy lots of benefits. Banks and lenders can easily provide the loan and they don't have to worry about the interest rates while getting any kind of credit or loan.
Here are some of the guidelines on how to improve your credit score:
1. On time payment of the bills: First and the most important step towards improving your low score is to pay your bills regularly every month before due date as the latest payment history is nowadays considered more important for creditors. To improve the credit score one should maintain a timely payment strategy for at least six months.
2. Any error in the credit report should be fixed immediately: One should make sure that the report is error free, if somehow, an error appears on the report a timely written request to the concerned agencies should be given so that the error is corrected as it takes time to investigate. The longer the time it will take to clear the errors the lower the score will be.
3. Get your credit report annually: It is very important that before wanting to improve your score you have to get your credit report. One should get this credit report annually from the credit agencies get it analyzed so as to maintain his or her score.
4. Pay off your credit card debts: Credit card debts should be cleared in time because if your credit card balance remains high it will lower your credit score. The credit accounts should be resolved by paying them.
5. Outstanding debts should be cleared: If there is an old payment due for over an year or more, one should contact the company immediately and should clear it by paying it off fully or lower the credit debt. Then the agencies are informed about your updated account and the credit score starts rising.
By following some of the guidelines before applying for a loan one can raise his credit score.