Going from Zero to 720 Credit Score in One Year

Critical Factors That Affect Your Credit Score

As you probably already know, your credit score can have a big impact on many different areas of your life. If you have little or no credit history merchants don’t know if they can trust you or not so they charge you big deposits for everything including getting a cell phone, renting a car, renting an apartment or getting the electricity turned on. These deposits can be several thousand dollars! But if you had a good credit rating they would waive these deposits altogether.

If your credit score is not the best at the moment, you could be thinking about taking steps to improve it, but might not know the best ways to do so. Below are some of the things you should think about when it comes to your credit score.

Amount of Debt

Pay attention to the amount of debt you currently have. If your debt is very high in comparison to your income, this can cause your credit score to go down, and can look bad to potential lenders. Additionally, if your credit cards are maxed out or are close to their limits, this can affect your score and be a warning sign to lenders. Ideally, it is best to only use a small percentage of your available credit. This is called “credit utilization” and it is best to keep it below 30%. So if you are just starting out and only have a $300 credit limit on any particular card you may need to pay your bill multiple times a month to keep the balance below $100. Doing so can help you avoid getting into too much debt, and can help you maintain a better credit score.

Going from Zero to 720 Credit Score in One Year

Late Payments

One of the biggest things that can impact your credit score is whether or not you make your payments on time. If you are paying your bills late, you should know your credit score is taking a hit for every late payment you make. If you have found you are in over your head, and are unable to make payments, it’s a good idea to work with your creditors to see if they can help. If not, you may want to work with a bankruptcy lawyer. Even though filing bankruptcy can negatively impact your credit, it can help you get your finances in control and can actually help you restore your credit a lot more quickly than continuing to “drown” in debt you can’t pay back.

Age of Accounts

Having older accounts on your credit can actually help you maintain your credit score. Each time you open a new account, your credit can take a small hit. Closing out older accounts can also cause your credit score to go down.

As you can see, there are many things you have to worry about if you want to maintain a good credit score. If you pay attention to these three things, you can help ensure your score looks good to potential lenders. This makes it easier to score jobs, rent an apartment, buy a house, and more. Even if your score is bad now, focusing on these things can help you restore your credit score so it can be better in the future.

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