How to Improve Your Credit Score: The Ultimate Guide

Your credit score is one of the most important digits in your life. A high score is an asset for your personal finances and career; a low score, meanwhile, can land you in serious debt and even legal trouble.

 Photo by: Anthrocopy 

 

Judging from the never-ending stream of credit report ads on TV, though, most people have no clue what their credit score is or why it matters. This simple string of numbers can have a major impact on your entire future, but it doesn’t need to be a mystery or a menace. With careful planning and a little learning, you can identify your credit score and make it work for you.

 

Why Your Credit Score is Important

You’ve seen and heard free credit reports ads on TV, radio, and the internet, which you’ve no doubt learned to tune out. It’s no wonder, then, that so few people know why credit scores are such a cause for concern. Your credit score can affect all of these important parts of your life:

  • Loans: Your credit score affects your chances of getting a loan, be it for a car, a new business, or a home. Loan agencies use your credit score to determine the risk they will be taking in giving you a loan; if you have a poor credit score they will give higher interest rates and require a larger down payment to balance the greater risk with a greater reward.
  • Insurance Rates: Insurance companies determine rates based on credit. They may not be looking at the scores themselves but, rather, your payment history to judge the likelihood that you will make your payments regularly and on time.
  • Cell phone contract: If your credit score and history is in bad enough shape, some cell phone providers will deny you a contract – though this only happens in cases of extremely poor credit.
  • Utility deposits: Having poor credit will not prevent utility companies from offering you their services, but if it’s especially bad they may require a deposit to guard against failure to pay in the future.
  • Professional licensing: Some professions, including law and medicine, will deny licenses to practitioners with poor credit.
  • Terrorism investigation: In the years following 9/11, the government has given some agencies, such as the FBI, the authority to do credit checks on individuals with little or no warning. 
  • Renting an apartment: Federal law permits landlords to use
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