Everywhere we turn, we seem to hearing about the importance of our credit score. You must increase your score in order to get a loan. Improving your credit score is possible, but you have to be responsible in your spending and wise in the financial decisions you make. Equifax is one of three credit reporting agencies that monitor your credit activity and give you a score based on your creditworthiness.
Credit Score
Your credit score is a reflection of the amount of risk that a lender or creditor takes upon himself by lending you money or extending you credit. As your score increases, the lender takes less risk; therefore, you are more likely to get the loan you are looking for. Credit scores range from 300 to 850. In order to get the most competitive interest rates, your credit score needs to be at or above 720.
Increasing Your Score
Equifax recommends several different strategies for improving your score. Many of them are intuitive, while some are not. Since there are many components of your score, it is important to understand them all.
One important component of your Equifax credit score is your debt ratio. Higher credit card and loan balances mean you have a higher risk of missing payments. Paying off your balances is an important step to raise your score.
Credit history and average account age are important components of your credit score. The longer you have an account, the better that reflects on your score. Equifax recommends against opening multiple accounts at once, because that can lower the average account age and actually lower your score. Only open new accounts as needed, and avoid closing old accounts.
Your payment history is perhaps the biggest contributor to your Equifax credit score. Making payments diligently and on time each month will raise your score and keep it high.
Other Tips
If you miss a payment, make sure to make it up immediately. Catch up and stay current. If you fall behind on payments, contact your creditor to explain the situation to them and work out a payment plan. Also, write to Equifax and the other two credit reporting agencies--Experian and TransUnion. They can put that information in your credit report.
Contact a legitimate credit counseling service for assistance in managing your credit. Many nonprofit agencies can help get you back on your feet.
Check your credit reports often. You can check your credit report annually for free from each of the three credit reporting agencies. Verify that the information is correct, and dispute anything that is in error.
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