Great Advice For Credit Point

Introduction

A person’s credit point plays a vital role in determining the type and amount of credit they can access from different lending institutions. It is therefore important to maintain your credit score above a particular limit, to ensure the financial security of yourself and your family. Here are some tips that you should help you to get your credit point in tip top condition.

Step 1

While there may be some good reasons to close a credit card account, such as avoiding to pay annual fees, concerns about identity theft, or to reduce the temptation to overspend, closing a credit card for the sake of raising a credit point is not a valid concern. Credit score rating agencies will often take into account your credit utilization, while computing your credit score. Your credit utilization is the ratio of balances owed compared to credit limits on revolving accounts.

Step 2

Credit score rating agencies will compute your credit utilization for all your credit cards. The lower the utilization the better your credit point will be. Closing your credit card or requesting for a lower limit, will impact your credit score negatively by raising your credit utilization computation.

Step 3

If you are consistently “maxing” your credit card limit and paying off the balance in full, once the bill arrives, you may be impacting your credit score negatively. This is because credit rating agencies will consider your account balance while computing your credit point. The balance indicated on your statement by the time your issuer supplied it to your credit reporting agency, will also be reflected in your credit report.

Step 4

The best way to overcome this scenario is charge less amounts on your credit card(s). You should be able to see an immediate effect on your credit report and thus your credit point.

Step 5

Learn to use your credit cards lightly. As we have already mentioned, over utilizing your credit cards will have a negative effect on your credit score. Try to perform an analysis on your monthly bill statements to see how your balances compare to your credit limits. You can improve your credit point by increasing your payments or reducing your usage of credit cards.

Tips

You actually have more than one credit score. Different credit rating agencies will use different scoring models to come up with credit point. The score ranges will vary, as will the weight placed on certain categories of credit data. For example, FICO scores typically range from 300 to 850, with most of the weighting placed on the payment history category, which accounts for 35% of the score. Since the data collected by the three credit ratings agencies- Experian, Equifax and TransUnion- can vary over time, so too will your score differ from one credit bureau to the next. It is therefore not uncommon for a lender to access a credit score than may be inaccurate or unfavorable for your financial needs. To counteract this issue, you should keep your credit reports accurate and check your own score, instead of relying on the one used by your lender.

Comments

Most Recent Articles