Keeping your Credit Score in line

Your credit score is a number. But it is a very important number. It could stand between you and that house you’ve been wanting to buy, the car you want to rent for a holiday or any sort of dream purchase you’ve been pining for. However it’s nothing but a number. So keeping it stable and around the same place, or even increasing it, is paramount.

Your credit report is, essentially, a snapshot of your credit history and your credit score is a number that represents that. Your credit score is very important for future employers or landlords who will check it to see your reliability and promptness in paying back owed money. It is simply a number but that number can affect your life in either a positive or negative way depending on what it is.

The relationship between the two is very simple. Your credit score is calculated from your credit report using a myriad of calculations which is another article entirely; therefore, it’s vital that you check your credit score via services such as creditsesame at least once a year to be in the clear, as it will help you track any discrepancies in your credit history or help you improve it in case it is poor.

Why should I keep my credit score stable?

Since your credit score is a very important number and the higher it is the better off you are, keeping it stable is very important. It should only go one way. Up. The higher the number the better your score is. This means that a lender (think bank) would be more willing to lend you money. Keeping it nice and high is important because if it drops, banks lose interest in lending you money. Even applying for new credit cards is easier if your credit score is high and is consistently so. According to myFico.com the best thing you can do for your credit score is manage it responsibly over time instead of fixing it quick.

An explanation of the different ranges

So you get your credit score. What next? Sure, higher means better but how high and what do the different ranges mean?

300-579: This is a poor FICO score. You’ll probably find it difficult to get a credit card at all, and if you do, you’ll pay higher interest rates or fees. If you missed a lot of payments, just declared bankruptcy, or have yet to establish a credit history, you’ll have a poor credit score.

580-629: If you fall in this range, you’ve still got poor credit. Focusing on establishing a solid payment history should be your primary objective. Don’t apply for too many credit cards at once as too many inquiries into your credit history in relatively short a period of time will negatively affect your score.

630-689: In this range, look for a credit card for fair credit. You’re out of the bad credit range, but you still have a ways to go. Take a look at the kinds of debt you have. Mortgages or student loans are favorable; because they show that you can take out a loan and pay it off over time, unlike credit card debt, which shows that you may not be as trustworthy. Continue to make regular payments of your debts, and keep an eye on old accounts.

690-749: You’ve got good credit, well done! You should qualify for most credit cards, get fairly low interest rates, and can begin to reap some rewards. At this stage, you can consider acquiring reward credit cards that will give bonuses on your regular purchases.

750-850: Congratulations! You are in the range of excellent credit. This means you can enjoy the lowest interest rates, the highest credit limits, and the best rewards. At this stage in the game, a major consideration in your choice of credit card should be the benefits. All cards require fraud protection, but the best premium credit cards will offer perks like concierge service, lounge access, and lost baggage insurance. You’ve got the best credit out there. Make the most of it.

How can I do that?

All of this sounds good and well, but how do you actually keep your credit score stable? Don’t worry, here are a few tips from the Financial Consumer Agency of Canada (FCAC) that will help you secure the loan you need on the dream house:

• Pay your debts in full and on time.
• Reduce the number of credit applications that you make.
• Try to keep your debt ‘good’ i.e. student loans, mortgages, etc. show that you can pay back loans on time and in full.

Keeping your credit score high

Now that your credit score is high and mighty it’s vital that you keep it there. Keep it high. If your score fluctuates too much it will signal to banks that your spending habits might be erratic and out of order. There are normal fluctuations, as the score represents only a snapshot of your whole credit history, but too much change can spell disaster for your future.

Keeping it high is quite a simple matter. By following the tips above you will be able to get it high but to keep it there you must be consistent. By practicing and implementing the above over a longer period of time will keep your credit score high. After all credit scores are one of the tools that banks and other companies use as a tool to determine whether or not you are a good credit risk.

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