Importance of Credit Scores

Hi!  Brenda here with some information you may find useful regarding your credit scores.

Have you noticed that your credit report has become more and more important to the quality of your life than ever before?  It’s used not only for purchasing a new home in Utah, car or getting a credit card but also for car insurance, to rent a home or apartment and for jobs and promotions.

You can save a lot of money in interest rates alone with a great credit score.  Didn’t ever have training on the credit scoring system?  Join the club!  It’s only been in the last few years that we’ve been given any information on how the system works.  Here are some tips on what to do and what not to do to improve your scores:

Credit Do’s

• DO get a copy of your credit report and go through it line by line to look for errors.  Be sure to also look at your personal information for mistakes.
• DO stay current on all your existing accounts. Being even 30 days delinquent on one account can drop your score dramatically.
• DO pay existing credit card balances to 30% or less of the credit limit. The unused available credit signals the scoring system that you are not living on credit and therefore your score should improve.
• DO go to optoutprescreen.com (or call 1-888-567-8688) to opt out from receiving marketing offers for new credit.  Typically the type of credit offered is of low quality and it’s good to remove the temptation.

Credit Don’ts

• DON’T pay off any collection accounts or charge offs while attempting to get a loan. Due to flaws in the system, paying an old collection account will generally lower your credit score.
• DON’T close credit card accounts. If you close a credit card account, it will appear to the scoring system that your limit to balance ratio has gone up and your scores may drop.
• DON’T consolidate your debt onto 1 or 2 cards. Although it may seem like a smart thing to do, it appears that you are maxed out on those cards and will lower your scores.
• DON’T apply for new credit unless necessary. Each time a potential creditor pulls your credit, you may lose points from your credit score – 2 to 50 points, depending on all the other elements of your report.