Your credit score is one of those things that you don’t necessarily think that much about until it’s too late.
Credit scores are used by banks and other financial institutions when they are assessing whether or not you are a good risk to lend money to or provide some other line of credit.
How are credit scores calculated?
Lots of different factors are taken into consideration when your credit score is being calculated. One of the most important aspects is your track record in managing the financial obligations that you have – are you able to pay your bills on time? Are you able to service any credit cards or other lines of credit that you currently have?
If you have been able to demonstrate over a period of time that you are financially stable and able to manage your finances then you will be considered to be a good candidate for any future loans or credit applications.
Can I see my current credit score?
There are a number of free services available which will give you your credit score if you apply for the information to be released to you.
If you are considering applying for a loan or some other form of credit, it is probably a useful guide to find out if there are any problems with your credit score that could negatively impact your application.
How do I repair my credit score?
If you’ve identified that your credit score isn’t as strong as it could be, there are a couple of credit repair options open to you.
Sometimes your credit score may include an error – your credit report might show some sort of financial event that is incorrect or that doesn’t actually relate to you. In these circumstances you can apply to have the incorrect information removed.
If your credit score has been damaged by your financial performance in the past, then repairing your credit score will take a bit longer. Negative events will stay on your credit record for about five years, or longer if it’s something major like bankruptcy. As well as waiting for the time to pass, you need to take action to demonstrate that you are on top of your financial obligations – make sure that you are paying your bills on time, reduce any lines of credit (such as credit cards) that you don’t need.
The important thing is to get your finances under control and get back on the road towards sound financial management.