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Oct 17, 2019

Understanding the Importance of a Credit Score

Are you looking to purchase a house for the first time? Maybe you are looking to take out a loan? These are loans that factor your credit score and depending on how good of a credit score you have – the lower your interest rate and the better of a chance, you'll get a better deal.

How is my credit score calculated?

Your credit score is calculated with the help of various reports from lenders and companies to which you have a loan or whom you pay. The lenders will report whether or not you have been paying your bills on time, have you defaulted or skipped a payment. There are agencies, such as the Credit Reference Agencies (CRA) that are used to help gather 'one's credit score.

What is considered good credit?

A credit score will range from 0 to 999. A good score is one that is between 881 to 960, where fair is between 721 to 880. Most of us will fall under the fair category if we pay our bills, mostly on time and 'don't default.

Can you improve your credit score?

Not in the fair category? 'Don't worry; you can do things to help improve your score. It 'won't be instantaneous, but over time it will show lenders and credit agencies you are taking a step in the right direction. 

How can you improve your credit score?

  • Pay your bills on time
  • Keep your credit card usage low, try to use between 25-30% of the balance
  • Pay off any outstanding debts

 Your credit score is just as crucial as your drivers' licence and ID. Without a decent credit score, it can make basic and ordinary things such as buying a home, car or taking out a loan for school difficult. Find yourself on the other end of good? 'Don't feel down or discouraged. There are ways of improving and getting your score to fair and eventually good!

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