What's My Credit Score? Why Should You Care What Your Credit Score Ratings Are Anyway?

Are you finding that financial institutions have gone from practically throwing money

at people regardless of whether they could afford to repay it or not, to not lending anybody anything.

There should be a happy medium but as yet the banks and credit card companies don't appear to have found it. Add to that the fact that the three different bureaus all calculate your score slightly differently and the lenders do it a different way again, it is easy to see how you can become confused.

So what is a good credit score? If possible you should be aiming for the 700 to 800 level as the higher your number the easier it will be to obtain future credit and the lower your interest rate.

Most people would have had no issue scoring this a couple of years ago but now the goal posts have been moved. Lenders are far more likely to examine your file and they get nervous if they see too many recent searches as it suggests you have tried to obtain finance from other places. They also get jittery if your existing credit agreements have not been well maintained. Late payments or arrears raise big red flags.

You should check your annual credit score to make sure all the information held on file is correct. If there are mistakes, you can have them rectified. You can also see if you have any old accounts that are still active but you thought had been closed. We often clear the balance on a credit card but forget to cancel the account. Go through all of your open accounts and get rid of the ones you don't use anymore.

Don't apply for more credit until you have your current arrangements fully under your control. Try to reduce the balances outstanding. If you have made regular payments on all your commitments, then contact each lender to see if they will offer you a better interest rate. The lower the charges you are paying, the further your money will go and you will get out of debt sooner.

You should also concentrate on repaying just one card keeping the minimum monthly payments going on the others. You can either pick the card with the highest interest rate and pay all additional money into this one. This is the sensible option as you will reduce your overall charges. But sometimes we can have a small balance on a card - if we get this one cleared we have scored a small victory in our battle against debt which will spur us on to great achievements.

What's My Credit Score? Why Should You Care What Your Credit Score Ratings Are Anyway?

By: Chloe Lowther

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