Considering every American is in pursuit of a strong credit score, which can get them better rates on loans and be seen as less of a risk to creditors, Fox Business recently gave consumers information they need to know to improve their scores.
Credit scores are also sometimes referred to as FICO scores, which can range from 300 to 850, with the higher the number best for consumers. Most creditors consider a score above 700 to be acceptable to give consumers the best rates. For Americans whose credit score is below 700, there are always methods to improve.
The best way to improve on your credit score is to make sure you pay your bills on time and you have steady income so bills aren't stacked up until you're completely buried in credit card and loan debt.
In addition to your credit score, lenders might also consider your custom credit score, which is generally used by a number of lenders who would like to get a closer look at the risk factors that are relevant to what you are trying to fund with the line of credit.
According to Bruce McClary, an NFCC consumer certified educator for Clear Point, a nonprofit credit counselor headquartered in Richmond, Virginia, not every creditor is required to report your credit, which leads major lenders to use their own internal credit scoring systems to help them decide on lending.
“These scores are developed by lenders internally to predict the future behavior of their customers,” said Saurabh Sharma, president and CEO of Indus Insights, an analytical consulting firm with extensive management experience in credit policy. “Remember the questions that you fill in on the application form when you are applying for a loan or a credit card? Most of those responses also go into creating a custom score for you.”
According to Karen Carlson, director of education at InCharge Debt Solutions, a nonprofit credit counseling agency in Orlando, Florida, what makes you appealing to one will make you appealing to all, and if you credit is damaged, you should make sure that new information is reported to credit agencies.
Sharma encourages consumers to at least pay the minimum due if they can't pay the entire balance off. Paying the minimum balance will keep your credit score intact and from dipping into your basic savings accounts to pay for bills.