Whether you are trying to purchase a car, home or just getting quotes for auto/home insurance, your credit score plays a key role in each of these transactions. Your credit score not only determines if you qualify for a loan, but can determine the rate of interest that you will pay. If you have a good credit score, you will likely qualify for a better interest rate. Trying to determine how your credit is scored can be tricky. There are some hard, fast rules that everyone should keep in mind when using and applying for credit.
1. Do not apply for every credit offer that you receive in the mail. Each time an inquiry on your credit is done, it brings down your score by a few points.
2. Always, always pay your bills on time. For the most part, creditors report late payments of 30 days or more. If you are a day or two late, it probably won’t be reported.
3. Use your credit and pay it back. Believe it or not, having lots of available credit that is never used can bring your score down.
4. You should be checking your credit on an annual basis. Mark it on the calendar and do it once a year. While there are many services that you can sign up with and pay the fees, there is one site that is free to everyone. The web site is www.annualcreditreport.com. This site allows you to pull your credit report for all 3 credit agencies at no charge. If you find an error, you are able to file a dispute on-line. In addition to reviewing your credit history, you should be checking to see who is pulling your credit. If you find a creditor has done an inquiry and you don’t do business with them, you need to find out why. It could be the start of identity theft.