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Credit score headaches: What you need to know

Credit score headaches: What you need to know
Credit score headaches: What you need to know
Photo by Thomas Cooper/Getty Images

Your credit score is essential for securing loans, rental properties, and even for many employment opportunities. Credit scores are determined by a how timely you are with your monthly payments, as well as your overall debt to credit ratio. Generally speaking the following numbers determine your ability to secure futures loans—or whether or not you have “good” credit.

  • 720-850 excellent
  • 675-719 average
  • 620-674 below averages
  • Below 620 poor

If your credit score is less than excellent, consider the 3 tips below as suggested by North American Bancard for improving your credit score. It will take time to see improvement, but these tips will get you started in the right direction.

Tip #1 Identify Your Areas of Opportunity

Begin by determining why your score is lower than you desire. This most often due to debt being placed in collection, late payments, or having too much charged on your credit cards.

Tip #2 Bring Credit Card Balances Down

Even if your payments are timely, your score may still be lower than excellent. This is most often due to your debt to credit ratio. You can improve your debt to credit ratio by having more available credit on your credit cards than debt.

Tip #3 Open New Credit Accounts

While this may sound counterproductive at first, open new credit accounts—that you do not intent to use. This will improve your debt to credit ratio, and provide you with more positive credit. If you are going to use your new credit cards, charge small amounts that you pay off in full and on time each and every month.