Credit score is a concept which is rarely thought about. Everybody knows it’s there and assumes nothing can be done about it. However, this may not be the case. Something can be done to improve the credit score and one should do it for own betterment. Contrary to popular opinion, there are no mysterious inner workings and credit scores can be easily improved.
The process to improve the score is quite simple. To improve it, one must first know the score. If one know it, it will also be possible to know where one stands in the credit rankings. After this, the personal score must be compared with the consumer score ranges. If the score is 750 and above, then it is deemed that the person has excellent credit. A score between 700 and 749 implies a good score and the ranges 650 to 699 and 600 to 659implies fair credit and poor credit respectively. Bad credit is said when the score dips below 600.
The score should be compared to the average score of that person’s age. A chart prepared by The Financial Diet neatly slots individuals aged from 18 to 24 years of age to have an average credit score of 638. A score of 652 is assigned as an average number for people between 25 and 34 years of age. For people aged between 35 and 44 years, and 45 and 54 years, the average scores are 659 and 685 respectively. For people nearing retirement, with ages 55 and above, 724 is the average credit score. It is found that approximately 24 percent of total Americans suffer from bad credit scores. About 22.9 percent enjoy the middle ground from 600 to 699. Approximately 53 percent of Americans have excellent scores above 700. A person should aim for the middle scores, if not for the excellent ones.
An easy way to keep the score high is to live within one’s means. Credit should not be more than 30 percent of the total spend. One must maintain a budget and pay with one’s cash. It is also important to pay off the credit balances every month. Another method to maintain the score is to make minimum inquiries about one’s credit score. Do not make this application unless it is necessary. Every hard credit check bleeds the credit score. Inquiries are an indirect way of telling financial institutions that you have doubts about your ability to pay back your own soon to be borrowed amount.