Know Your Rights

Improving Your Credit Score

When it comes to a low credit score, understand you are not alone.  More than 30 million consumers nationwide have a credit score of 620 or less making it more than a little bit difficult to be approved for credit at a low interest rate.  Your credit score is the three-digit number calculated by using the information contained in your credit report.  Your score is designed to notify lenders whether you should be considered a credit risk or the type of consumer lenders would want to extend credit to.  Essentially, your score is an indication of your financial behavior.

Improving and maintaining a good credit score can be a daunting task, but is essential to your livelihood as a consumer.  A low credit score can mean lenders, landlords and employers will refuse to extend you credit, rent you an apartment or even hire you for a job.  A low credit score can deny you use of a credit card, car loan, mortgage loan, insurance and utility service and a low score can follow you for as long as ten years.     

On the contrary, consumers with a good credit score, 700 or higher, will receive the best interest rates and payment terms, allowing them to save for their future and live a more comfortable lifestyle.  Becoming a consumer with a good credit score who is considered financially responsible is not impossible if you follow a few tips recommended by the Federal Trade Commission and the Consumer Financial Protection Bureau, the two agencies in charge of consumer affairs.   

Tip 1: 

Make an effort to pay all of your bills on time.  Even though your credit report may not be pristine, the older your negative accounts, the less they will affect your score.  Paying your bills in a timely fashion despite an already low credit score will show lenders you are serious about your obligations and improve your score over time. 

Tip 2:

Make an effort to keep your credit card balances low.  While you may make timely payments each month, part of your score includes your debt to credit ratio.  This means that if your account balances are exceeding or close to your credit limit your score will suffer as a result.  Trying to make large monthly payments or not charging your maximum credit limit each month will improve your score.

Tip 3:

Review your credit report on a regular basis to ensure its accuracy.  The Fair Credit Reporting Act entitles you to at least one free credit report a year.  Make sure to order your report at to guarantee it is reporting only accurate information.  Mistakes can and do happen and can be devastating to your score.  Review your report and take the proper action if errors appear. 

Tip 4:

Establish a budget that is realistic for you.  Keeping to a budget will allow you to live within your means and make sure you have money to pay your bills and not overspend having a positive effect on your score.

If you need assistance with reviewing your credit report or advice about improving your score contact SmithMarco P.C. for a  free case review.

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