The Credit Score Basics

Your credit score, and your criminal record

Your credit score, and your criminal record. Both depend on your past, both can make you or break you, and both follow you around for a really long period of time. But, only you, and maybe your attorney, know the details of your criminal record. Your credit score is a whole different story. It can be pulled when you apply for a new credit card, go for that new job, try to get a new car, or even try to move in to a new place.

For beginners, here is a brief summary and explanation. Your credit score is based on a number system that ranks between 300 and 850. A mysterious secret formula (OK, OK a mathematical algorithm that you can look up on the FICA website) will ultimately determine what your score, and your financial fate, will be. Both experts and creditors alike will inform you that they feel like your score will be a very accurate prediction of how good a job you are going to do when it comes to paying your bills.

Even if you aren't trying to land that new job, or get your hands on a new car, or credit card, your credit score is still crucial. That is due to the fact that if you already have a credit card, your creditor will glance over your credit score to decide whether it's a good idea to decrease your credit limit and make you pay less, or give you a higher interest rate and make you pay more. Those financially savvy chosen ones with the highest scores will obtain the lowest rates.

However, don't despair just yet if you have a crummy credit score. The money gods tell us that you can always redeem yourself. Here are a few basic rules of thumb to keep in mind: attempt to pay your bills on time. Paying a bill late, or even worse, letting one of your accounts go delinquent and into collection will result in a negative impact on your credit score. That being said, it logically follows that the longer and more consistently you pay your bills on time, the better your credit score will be.

If you currently have debt, just try to pay it off rather than moving it around. The experts can tell when you're trying to pull a fast one. It might seem like a good idea to close credit cards you've had for a while but haven't used- less temptation right? But don't! For credit scores, it looks good to have a lot of credit available for you to use, and for you to use only a little of this credit. Also, that old card leads me to my final tip: maintain longevity. Try your best to keep your oldest accounts alive, because that is what looks the best for your credit score. My final word of advice for people looking to improve their credit score is: for the love of God, don't open any new accounts. They will decrease your average account age, and reduce your account longevity (we just talked about that) and racking up bills and not paying them was what got you into trouble in the first place! Good luck and happy spending.

by: Mallory Megan

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