Getting a copy of your credit score used to be a painless process, but times have changed. In these difficult economic times, it is not uncommon for a person’s credit score to drop a few points. When you get that dreaded call from a lender to inform you that you have dropped a point or more, you may start wondering what helps your credit the most. There are many different things that can affect your credit score.
The amount of debt you have can have a huge impact on your credit score. If you have a lot of outstanding debt, lenders view you as high risk and your chances of defaulting on those loans will be high. Lenders are concerned about providing credit to those who have too much debt. As such, they will charge higher interest rates on those with too much debt.
Another thing that affects your credit score is the total amount of credit you have issued. The larger the number of credit cards you have issued the higher your credit score will go. This is why it is so important to keep your credit cards paid in full each month. When you do this you are proving to lenders that you are responsible with money and you do not easily become a credit risk. Those with a smaller number of credit cards will have a lower credit score because they are not being overextended.
Paying your bills on time is also very important. If you have let your debt get to the point where you are late in making your payments then lenders will take this into consideration when deciding your credit score. This is why it is so important to pay all of your bills on time. This will help your debt load to decrease. Eventually, you will be able to get back on track and raise your credit score.
If you are still asking, “what helps your credit the most?” then you may be too concerned with how much debt you currently have or the debt that is going to accumulate in the future. It is not good for your credit score to have a lot of debt. You can try to reduce your debt or even get rid of it together by consolidating all of your credit cards into one loan. By doing this you can be on the road to better credit in no time at all.
This post was written by Kristian D’An, owner of Lux Credit LLC and CCA board certified credit repair specialist. Lux Credit offers credit repair services for those looking to improve their credit!