Your credit score impacts everything from the interest rate on your mortgage, to your insurance premiums, to whether you’ll get the job you applied for. According to MSN’s Liz Pulliam Weston, today’s ideal is to have a score of 740 or higher (scores range from 300-850).
We are all entitled to a free credit report once a year from each of the three credit bureaus. However, one of the most maddening aspects of the credit score game is that we have to pay for our score. The least expensive way to obtain your score is to purchase it from Equifax during the process of getting your free credit report. The last time I did so, it cost $7.95.
The single best way to improve your score is to pay your bills on time. This counts for 35 percent of your score. So, Weston recommends putting all your bills on automatic payment. We pay some of our bills that way, like our mortgage, gas bill, and electric bill. However, for our credit card bills and phone bills, I prefer to get e-mail reminders as to the due date rather than set those on auto pay. I’ve seen too many issues with both types of bills to just give the companies the right to pull money from our accounts each month.
The second most important way to keep your score high is to keep your “credit utilization” low. That’s the percentage of available credit that you use. The ideal is to use no more than 10 percent. So, if you have a $5,000 limit on a credit card, you should charge no more than $500 on that card within any billing period.
One of the myths about credit scores has to do with carrying a balance on your credit cards. Some people think you have to do so in order to build your credit score. As Weston pointed out, you do not. That’s good news since it’s never a good idea to carry a balance on your credit card.
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