According to the experts, there are above 30 million people in the United States who have credit scores below 620. They say that given this situation, it is as if that the people are forgetting the basics of the concept of credit score. According to them, what is needed is to simply master the fundamentals - and they say it is easy.
Many Americans still forget to get their credit reports even if these were free. It comes from the three major bureaus: Trans Union, Equifax, and Experian. Getting a credit report allows monitoring of the status of one's credit. By getting one, the person can check if there are incorrect data stated and then it can be investigated to find out why that happened. Then, if errors are spotted, it should be reported to the bureau so it can be corrected and one's credit will be protected.
Paying bills on time is of course imperative. Delaying payments will mean a lower credit score and that is a given fact. Yet, experts say many fail in this category. The professionals have said that the payment history is 1/3 of the total score or 35%. The most recent happenings in payment history have much more weight compared to those done more than two years ago. Experts have advised to not underestimate the impact of payment history as it can diminish the credit score by an automatic 50 to 100 points or so.
Closing old and unused accounts must not be done, said the experts. The concept of credit score has changed. Now, closing old accounts can harm one's score because the lenders see it as a sign that the person no longer has the capabilities to sustain that account, or they could see it as an indication of bankruptcy.
Debts must be paid. Reports about your outstanding balance made by your credit card provider are sent to credit bureaus on a monthly basis. It is not a problem whether you pay it the day after or pay it on monthly installment. This is because credit bureaus are unable to determine people who have balance on their cards from those who do not. With that said, you can still earn a good credit score even if you pay on a monthly basis. It has also been advised by the experts that paying debts increases the gap of your current debt with your credit limit. The farther you are from your credit limit, the better for your credit score.
The last tip of the experts was to avoid bankruptcy whatever happens. They said that a credit score of 620 is already starting to be difficult to manage. Bankruptcy has a score of 200 and below on their scale. That is, if you get this score or lower, it will be very hard to rise back from the debts.
The experts believe that the basics of the concept of credit scores are the key towards a good score. Remember that the credit score has a great effect on your loans - whether it could be cheaper or more expensive. Thus, the experts advise to learn the ropes and that way, you are going to have a better credit score.