Your credit score is a three-digit number between 300 and 850, generated by a mathematical algorithm (a mostly secret formula) based on information in your credit report compared with information on tens of millions of other people. The resulting number is said to be a highly accurate prediction of how likely you are to pay your bills.
If it sounds boring and unimportant, you couldn’t be more wrong. Credit scores are used extensively these days. If you rent an apartment, get braces, buy a cellphone service, apply for a job or call to get utilities connected, there’s a good chance your report and score will be pulled.
If you have an existing credit card, the issuer is likely to look at your credit score to decide whether to decrease your credit limit or charge you a higher interest rate. The higher the number, the better you look to lenders. People with the highest scores get the lowest interest rates. And, we hear, they’re getting the jobs.
Know your score. We can get our credit report free at AnnualCreditReport.com. Now we can get our credit scores for free, too. Check your credit scores anytime, anywhere, and never pay for it at CreditKarma.com. You will need to create a simple password-protected account, no credit card required.
Here are the ways to improve our credit scores:
Pay your bills on time. Making your credit payments on time is one of the biggest contributing factors to your credit score. Delinquent payments have a major negative impact on your credit score. If you have missed payments, get current and stay current. The longer you pay your bills on time, the better your credit score. Be aware, however, that paying off a collection account or bringing an account current will not remove it from your credit report.