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Here’s Why Your Credit Score Matters More Than You Think

[October 19th, 2018]

You may not spend too much time worrying about your credit history. After all, we’ve got enough to think about these days. Between going to work, getting enough sleep and exercise, keeping up with the news, and maintaining your relationships with family and friends, who has time to focus on their credit score?

But you may be in for a rude awakening when the time comes that you want to apply for a rewards credit card, secure an auto loan, or get pre-approved for a mortgage. A bad credit score, or even an average one, could lead to a higher interest rate than you bargained for, a declined application, or a request for a co-signer or collateral payment to guarantee the loan.

Your credit score is likely to be accessed by potential landlords and employers as well as any financial institution that is considering loaning you money or issuing you a credit card. So if you’re apartment-hunting or job-hunting, you’ll want to make sure your credit score is as healthy as possible.

The key to excellent credit

If you’d like to get your credit score as close to the 800 range as possible, there are a few things you need to do. The first one is to always make payments on time. A late or missed payment can make a dent in your credit score, and habitually late or missed payments can really drag it down.

Just as important as making on-time payments however, you should never max out your credit cards. Having a credit limit of $10,000 does not mean you should run up $10,000 in debt and take months to pay it off. Consider what your available credit is, rather than your total credit limit, and keep the amount you owe on a rotating basis to less than 10 percent of your total credit limit. That means keeping a balance due of less than $1,000 on a card with a $10,000 limit.

On-time payments and amount of available credit aren’t the only factors that make up your credit score, but they are the most important ones. If you can follow these two guidelines, your credit score is sure to shine.