A Credit Score Game Changer

Even if you make no changes in how you use credit, your credit score could change for the worse in the near future, according to a story on MarketWatch.com. The issue is that credit card companies are lowering some people’s credit limits because more people are falling behind on their payments. With a lower credit limit, charging as much as you usually charge will mean that you’re using more of your available credit. That worsens your “credit utilization” ratio, which can hurt your score. The lesson? Pay attention to your credit limit and try to use no more than 30 percent, preferably less than 10 percent. That advice holds true even if you pay your balance in full each month.

Credit scores have become increasingly important, with everyone from prospective employers to insurance companies using the scores to help decide who to hire and how much to charge. That means we all need to be credit score smart. The myFICO web site has helpful guidance about how credit scores work.

As I’ve mentioned before, everyone should get his or her free credit reports via Annualcreditreport.com. You’re entitled to one free report per year from each of the three credit bureaus. Check your report for errors and unfamiliar lines of credit, which could be a sign of identity theft. If you’d like to know your credit score, buy it from Equifax while ordering your credit report. It’s the only one of the three bureaus that offers the commonly used FICO credit score. It should cost less than $20.


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