Your credit score is a major factor when it comes to managing and navigating your personal finance. This is why you want to make it a point to build up your credit score as it will make things infinitely easier for you from a financial standpoint. However, this can get rather tricky as a slew of different things must be considered when it comes to increasing your credit score.
To help make things easier for you, we thought it would be useful to put together a brief article talking about important things you need to know about credit scores. If this is something you’re interested in knowing more about, enjoy!
Factors That Influence Your Credit Score
The first thing you’ll want to look into are the different factors that influence your credit score. For the most part, the main things to consider when it comes to your credit score are payment history, credit utilization, credit history, new credit, and mix of credit. While most of these are self-explanatory, there’s a common misconception when it comes to new credit. Some people falsely assume that having new credit is detrimental to their credit score. This just isn’t the case. While you will lose a few points every time you apply for new credit, this should be negligible as long as you don’t have too many new accounts or keep getting declined for trying to open new accounts.
The Effect of Your Credit Utilization Rate on Your Credit Score
As we’ve mentioned above, your credit utilization rate affects your credit score. For the most part, you’ll want to keep your credit utilization under 30%. This means that you should only use 30% of your credit card’s maximum limit. If you really want to see an immediate impact on your credit score, we recommend keeping your utilization rate well below 30%. Going above 70% usually starts to negatively impact your credit score as well. Remember, if you find yourself using above 70% of your available credit, there may be underlying issues you want to address. This might be a great time to sit down with a Licensed Insolvency Trustee to review your situation and options.
How Hard Credit Inquiries Hurt Your Credit Score
Hard credit inquiries are conducted whenever you apply for a new card. These inquiries lower your credit score whenever they are done. This is why you’ll want to be a little conservative when it comes to opening new accounts. To add to this, credit bureaus also see the act of opening many accounts at the same time as a red flag and could hurt your chances of being approved for a credit card.
What You Should Do If You’re a Victim of Credit Card Fraud
While credit cards are convenient, they also open you up to a slew of different threats. One of the biggest threats comes in the form of credit card fraud. In fact, credit card fraud losses reached a staggering $28.65 billion worldwide as many individuals fall prey to this threat. If your information has been compromised we suggest that you call your credit card company immediately so that they can take the necessary steps to prevent further damage. It would also be wise to diligently monitor your statements and credit reports so that you can spot anomalous activity.
Conclusion
Hopefully, this information proves to be useful when it comes to helping you improve your credit score. While this may seem like a lot of information to take in, don’t stress yourself out and feel free to look back on this article whenever you feel like you need a refresher on credit scores. For more specific questions, be sure to review the information provided by the credit reporting institutions in your country.
If you’re looking for credit counselling in London or if you want to review your options and learn about consolidation loans, debt management programs, proposals, consumer proposals and bankruptcies, we at Paul J. Pickering and Associates Limited are here to help you. We have over 30 years of experience in helping our clients resolve their financial problems. Whether you’re starting to get overwhelmed and you don’t know how to handle your debts and minimum payments, contact our office today, and we’ll put together a plan that will work for you!