Repair The Score

Credit scores are determined by Experian, Trans Union, and Equifax, and each have their own system for computing them.  The average credit score range is between 350 and 850, and the 600 mark is the so called “average” credit score.   These scores are created by the three credit bureaus from information that they obtain from creditors and previous companies that you have borrowed credit from.  This information is composed mainly of your credit period and the nature of credit that you borrowed, amounts still due, and past payments.  Suprisingly after a lot of research and statistics the average credit score for borrowers in the United States is 723.  Keep in mind however that this is the average for those that are BORROWING.  Many others have credit but are just not currently a hold of any credit.  This could be because their credit is so low they know they wouldn’t get approved anyway, or people that have started their credit but have done nothing to help it grow. 

Your personal average credit score is a good indicator of what you need to do to improve.  If your average credit scores are around 50o or less, then you are in the lower bracket of the average american credit score.  This also means that you need to start working towards improving your credit as soon as possible.  Some of life’s biggest events may or may not require credit; cars, marriages, school, house, etc.  If you are planning on doing any of these things and you aren’t already a millionare, then you should make a diligent effort to make timely payments on your bills and use your credit wisely.

Here are some tips to using your average credit report score, and to help raise it up a few notches:

• Credit inquiries can hurt your credit.  If you apply for a loan and are accepted but don’t decide to go through with it, it could be bad for you.  Every person that asks for your credit score shows up on your credit report.  If you have a lot of people asking for your score all the time, credit bureaus will deem you as a compulsive borrower and it will hurt your overall rating.
• If you can maintain a credit score of more than 700, you usually will be charged relatively lower interest rates, whereas if you have a score of 760 or higher you will get the very lowest rates on the market from any potential lender.
• 620 is usually the break even point for most creditors.  Scores under 620 will usually pay much higher interest rates on loans and credit cards.  It also makes it hard to secure loans with most financial institutions.
• The later a payment is made after it’s due date the more damage it will do to your national average credit score.  Try re-establishing your payment schedule to make sure you can make your payments on time, otherwise get rid of whatever is causing you late payments.
• You can increase your score by as much as 25 points if you just pay all your bills on the correct time in a given month.
• You will decrease your score by 70-80 points by maxing out your credit cards. So don’t do it.
• Applying for credit cards you don’t need could decrease your score by as much as 10-15 points.

These are just a few tips to help you be aware of, and prevent future credit mishaps.