Your credit score is the key to your finances that you don’t pay attention to, until you need it most. A credit score should always have at least one eye on it. To put it lightly, you should pay attention to your credit score a lot more than you do now and here’s why.
What creditors are looking for
Most creditors aren’t just looking at your credit score. They’re looking at the total package. A credit score is more than just a number. In fact, your credit score is comprised of the following:
- Bill-paying history
- Length of accounts
- Collection accounts
- Amount of debt
Your credit score is made up of a little of all these parts. Sometimes it doesn’t seem like it makes sense, but there is an algorithm to it that seems to work.
Your credit score has the final say
It doesn’t matter what you read online or how much people say credit scores don’t matter, they do. Your credit score can determine the following
- The interest rate you pay on a home loan
- The interest rate you pay on a car loan
- The type of credit you qualify for
- The type of credit card you apply for and the amount
- Whether or not someone trusts a rental to you
Insurance companies use your credit score
Many people don’t realize that the insurance companies are using your credit score. They look at your credit score and determine what kind of risk you will be. Seems a little judgemental, right? But, they have to determine your likelihood of filing an insurance claim from something and your credit score seems to be the best route.
Different credit strokes for different folks
It’s important to realize that each entity looking at your credit score has a different purpose in mind. When you apply for a mortgage, they’re looking at it differently, than if you were buying a car. A mortgage company is likely to look at your debt, income, and the debt-income ratio you have. Just keep in mind that each time you apply for credit, it might look a little different.
Utility companies look at your credit score
Did you know that when you go to turn on your electric or gas bill, utility companies look at your credit score? This may sound untrue, but it is! They want to see what your credit score is, so they can determine if you need make a deposit in order to get service.
How to Improve Your Credit Score
Now that you know why you should pay attention to your credit score, you might be wondering how your credit score can be improved. There are many ways you can improve your credit score, it’s just about knowing HOW to improve your credit score.
Pay your bills on time
One of the best things you can do to improve your credit score is to pay your bills on time. Write all of the bill dates for your bills on a calendar, so you always know when they’re due. Paying them ahead of time also helps! That way, if you think about it too late, it’s already paid ahead of time. Using online bill pay also helps because then it doesn’t cost you extra to buy stamps.
Pay down your debts
Although this can take a while, paying down your debts is also a good thing. Whether you pay down the debts slow or fast, the less you have, always the better. Less debt usually means a higher credit score. Plus, debt usually only costs you more money in the long run, so it’s better to just be done with it and pay it off.
Avoid repossession
Sometimes you can’t help it and your car gets sent back. It’s best to avoid any type of repossession to help keep your credit score up. Nothing sends your credit score plummeting like a repossessed vehicle. You may even ask yourself how this company can help!
Sign up for a credit monitor
These days, you can sign up for almost any credit monitor for free. Credit Karma and Credit Sesame will allow you to log in and see your credit score for free at any time! Of course, there is always an opportunity to upcharge to see more stuff, but take advantage of the free service.
Conclusion
Paying attention to your credit score is no joke. You may not think you need that score to be good, but you do! It’s best to keep up on it now, so when you do need it, the score that you want is there already.
Keep in mind that a foreclosure, repo, or bankruptcy can hurt your score in many ways! If you can’t avoid any of those paths, make sure you are prepared for how many years it can take to recover from the decision.
You should pay attention to your credit score because it will keep you from paying a lot of money down the road. When you have to pay extra interest on something, it’s only going to cost you more money.
2018 · 
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