Understanding Your Credit Score : How Can You Improve It?

Your credit score matters in purchasing a home. Your credit score determines the loan program and interest rate you are qualified for. Your score is a 3-digit score that is a summary of your credit health. To come up with your score, there are five different categories that the score is based on. The first and most important factor is the payment history. Your track record of payments and whether they are timely or not. A good track record leads to an increase in your credit score whereas missed payments and bankruptcy leads to a negative score. The amount of time your credit card has been open for is also important. The length of your credit history can improve your credit score as it accounts for 15% of the overall score. Opening up too many accounts can be seen as a red flag or considered detrimental to your credit report. Your credit score can be improved; however, it isn’t a quick-fix to repair it. There are steps you can take to ensure that you will ultimately have a better score overtime. If you make payments on time, that is probably the biggest contributing factor. Set up reminders and consider automatic bill payments to ensure you will not miss any payments. Also aiming to keep your credit balances at a max of 30% as anything higher will impact your score. Pay down your debt and increase your credit score. Pay more than the minimum amount to pay down your debt faster. Also, keep track of your history of credit use because a new history of responsible credit use will overwrite a past of credit misuse eventually. Call us today at (416)-621-7501 to learn more about effectively learning and understanding your credit score.