It is important to understand the general importance of a credit score, and what having a good score can mean for you and your future. The official definition of a credit score is summed as a numerical expression based upon a level analysis of an individual’s credit files, representing the creditworthiness of someone’s credit files. Essentially, a credit score is used to predict the likelihood of someone paying back a loan on time. The state of California has an average credit score of 600, with the national average coming in at 678. These FICO score ratings are considered “fair.” Below, read some great tips on ensuring that your credit score is up to date in the state of California.
1. Pay Your Bills on Time, and Pay off Debt
It is of critical importance that you always pay your bills on time. Apart from showing that you are reliable, this is a single factor that can either make or break your credit score. A late payment can remain on your credit report for 7 years if the payment is reported as late.
Paying off credit card balances is very beneficial to credit scores. The ideal way to avoid paying high-interest payments and unfortunately accumulating debt as a consequence, try to pay your bills in full each month. Of course, there are times that this may not be so possible to do, as bills tend to accumulate rapidly over time, but if it is possible, try to carry as low a balance as you can.
2. Minimize Opening New Credit Accounts
When you apply for a new credit card, there is always the possibility of seeing a dip in your credit score. Over time, as you start to use the card and pay off the interest, the impact will diminish, and there can be a quick bounce back with responsible credit behavior. To ensure that your score remains strong, apply only for the credit you need. Experts advise avoiding applications for new credit cards when looking to apply for new credit products, such as a mortgage. 10% of your FICO score will be affected by not only the number of open credit accounts but the number of hard inquiries lenders of credit make upon each request.
3. Dispute Inaccuracies Made on Your Credit Report
Keeping an eye on your credit score with persistence will help you see and better understand factors that may bring your score down, further giving you another avenue to restore your credit if needed. It is essential to ensure that there are no errors on your report, which can always be disputed and gain correction, only if the error is found to be legitimate. You always retain the right to dispute any inaccuracy in your report, as there is no cost or fee to dispute such errors. Simply contacting the credit bureau can resolve any inaccuracies, resulting in a desired credit score increase.
4. Consider Increasing your Credit Limit
It may seem counterintuitive to increase your credit limit while trying to smartly decrease credit debt, but it is well known that a higher credit limit can lower the overall utilization ratio-a comparison of an individual’s total debt balances to total available credit-therefore, making your credit score increase. You must be confident in your ability to not “max out” your debt before putting in a request to increase your credit limit. Before being given the green light to increase your credit limit, a credit card issuer may do what is called a “hard pull” of your credit score to determine if you are in good standing as a customer.
5. Monitor and Check your Progress Regularly
Credit score monitoring is available through credit unions, banks, credit card companies, credit bureaus, and independent providers alike. This service can offer 24/7 monitoring of your score, alerting you against fraud and identity theft. Personal information may always be monitored as well, mainly against password resets, suspicious transfers of funds, address changes, and unauthorized account accesses.
For more information on your best mortgage options in Mission Viejo and learn more about Californian credit scores, and mortgages.
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