When you’re looking to buy a home, apply for a credit card, or even change your cell phone provider, one of the first things they ask is “What’s your credit score?” But what exactly does this number mean? Is there such a thing as a “fair” credit score? In this post, we will explore the different types of scores and give tips on how you can improve yours.
What Is a Fair Credit Score??
A fair credit score ranges anywhere between 580-660. This is considered a “fair” rating, but it doesn’t mean that you’re on the same playing field as everyone else – far from it! Your credit report can be used to determine whether lenders will extend you certain opportunities or not, so having good standing with them (even if that means a fair credit score) is essential.
Think of your credit score as a reputation. If you’ve done something to earn the trust of others, they will be less likely to question what else you may or may not do in other circumstances.
What Is Good Credit?
Good FICO scores range anywhere between 660-780 and this rating signifies that lenders feel confident extending an array of opportunities your way – whether it’s low-interest rates on certain accounts or even applying for large loans such as mortgages and car purchases! Once people see that you have good standing with creditors, then they’re more willing to work with you when future situations come up where money plays some role (such as buying a home). Having a good credit score can really set one apart from someone who has fair credit because there’s a certain level of trust that is established when you see the number.
6 steps to Improve Your Fair Credit Score
1. Stop applying for new credit cards and loans.
Every time you apply for a new credit card, it’s recorded on your credit reports as an inquiry. When too many of these are made in a short period of time, then the creditor may question whether or not you’re trying to take out more debt than necessary. This can make lenders feel uneasy about extending their services towards you – which isn’t good if that happens every few months!
2. Pay your bills on time every month.
Payment history accounts for roughly 35% of your credit score. Even if you can’t pay all of it off, try to avoid missing any payments because this will seriously damage the rating that lenders see – and make it even worse than someone with an average rating! It’s also important to stay away from becoming delinquent on bills (not paying at all) as well because this could lead to additional penalties or higher interest rates in the future.
3. Don’t close any of your existing accounts, even if you’re not using them
Creditors don’t want to see you closing accounts because this suggests that you’re having trouble meeting your financial obligations. Instead of doing the latter, try combining all of them into one account so it’s easier for you to keep track and pay off in a timely manner. Also, remember not to open too many new ones at once – even if they have low or no interest rates! This will also be recorded as an inquiry, which can damage your score further.
4. Keep a balance of 30% or less on all of your credit cards (except for one)
Having too much available credit can also be detrimental to your score because it may make you appear as though you’re taking out more debt than needed. This is why you should try keeping a balance of 30% or less on all but one account – the exception being if there’s an interest-free promotion going on! The creditor will see that this card has a larger limit, which makes them feel confident about extending their services towards someone who doesn’t have high balances. Remember not to carry over any balances from month to month either because that could damage your rating even further.
5.Check your credit report at least once a year to make sure there are no errors
When you check your credit report, you’ll be able to see what lenders are thinking of you based on the information that they have. If there are any errors or false information being reported, then it’s important to immediately take action because this could lead to lower ratings and/or even damaged relationships with creditors!
6. If you have an error in your report, dispute it with the company that reported it and follow up until they fix it
The more you can resolve issues with credit reporting companies, the better chance that your score will recover. Remember to keep copies of all correspondence between yourself and creditors just in case something were to happen later on! Also, consider professional help if you’re having trouble – even though it might be a bit pricey upfront, it could make things much easier for you down the road.
Good credit is the foundation of your financial life. It impacts what you can buy, how much interest rates are on loans and other lines of credit, whether or not you get a job offer- even if you rent an apartment! If this sounds like something that’s important to you, don’t worry; there’s plenty we can do at Credit Triangle to help improve your fair credit score. We’ll start by reviewing all aspects of your finances with our team of experts who will then develop strategies for improvement based on their findings. The end result should be more opportunities in every aspect of your financial life. So contact us today and see how we can help you improve your credit score!