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Understanding Your Credit Score

What’s your score? Having good credit can help you when you’re ready to buy a car, take out a mortgage or apply for another credit card. However, having bad credit can make doing these things much more difficult and can mean higher interest rates, the need for a co-signer, or a larger down payment on a home. Good credit ranges from 660 -724, excellent credit requires a score of 760+ and anything under 560 is considered poor credit.


If you’d like to boost your score this year, here are some useful tips on how to improve it: 

  • Always pay your bills on time. While utility bills are not recorded in your credit report, some cell phone companies may report late payments to credit-reporting agencies, which could affect your score. 
  • Instead of splurging on non-essential items, put extra money towards your debts. 
  • Pay more than the required minimum amount shown on your monthly credit card statement whenever possible. Otherwise you’re paying off little more than interest.  
  • Similarly, try to keep your balance well below the limit. The higher your balance, the more impact it has on your credit score. Never exceed your credit limit. If you're close to being maxed out, make sure you pay more than the minimum or the interest could push you over your limit.
  • Use two cards to spread spending evenly (if you already have them). The percentage of available credit you're using each month affects your score, so it’s better to have two cards at 50 per-cent capacity each than have one card that is maxed out.
  • Reduce the number of credit applications you make. If too many potential lenders ask about your credit in a short period of time, this may have a negative effect on your score.
  • Finally, make sure you have a credit history. No credit record could equal a low credit score because there won’t be enough evidence that you can pay back money you owe.