NDSU Extension Service - Ramsey County


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A Higher Credit Score

A Higher Credit Score

            Carrying a bad credit score can be a silent but deadly killer for your financial health and wealth. With a bad or low credit score you will pay more for car loans, credit cards and mortgages. Those higher interest rates can easily translate into thousands and thousands of dollars that you are responsible for. And you have plenty of company. It is estimated that there are more than 30 million people in the United States with credit blemishes severe enough to make even obtaining loans and credit cards with reasonable terms difficult.  What is a bad score?

o    300-580: You’ll be denied credit or will only be approved for the very highest, most costly interest rates.

o    581-650: You may qualify for credit at high interest rates.

o    651-710: You’ll qualify for credit at moderate interest rates.

o    711-750: You’ll qualify for credit at competitive interest rates.

o    751 and up: You’ll get the most competitive, lowest interest rates on the market.

            And how to turn that low score into something better? 

            1) Pay down your credit cards. Paying off your installment loans (mortgage, auto, student, etc.) can help your scores, but typically not as dramatically as paying down -- or paying off -- revolving accounts such as credit cards.  Lenders like to see a big gap between the amount of credit you're using and your available credit limits. Getting your balances below 30% of the credit limit on each card can really help.How to fix your FICO score

            2) Check your limits. Your scores might be artificially depressed if your lender is showing a lower limit than you've actually are approved for.. Most credit-card issuers will quickly update this information if you ask.

            3) Dust off an old card. The older your credit history, the better. But if you stop using your oldest cards, the issuers may stop updating those accounts at the credit bureaus. The accounts will still appear, but they won't be given as much weight in the credit-scoring formula as your active accounts.

            4.) Pay your bills on time. If you have missed payments, get current and stay current.
Delinquent payments and collections can have a major negative impact on your score.  Consider setting your bills up for automatic withdrawal from your checking account. .The longer you pay your bills on time, the better your credit score. This won't improve your credit score immediately, but if you can begin to manage your credit and pay on time, your score will get better over time.

            5.) Pay off debt rather than moving it around. The most effective way to improve your credit score in this area is by paying down your revolving credit. In fact, owing the same amount but having fewer open accounts may lower your score.



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