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Stop Looking for Shortcuts to a Better Credit Score
March 21, 2022 | Posted by: Marc Crossman
The secret to credit score management? Pay what you owe on time, and never borrow even close to the maximum amount lenders will give you. Do only that and you will not have a problem borrowing at a competitive interest rate.
The latest question on credit scores, “How does carrying a credit card balance affect your credit score?” was a response to a newsletter on the importance of paying off credit card debt. It turns out that some people believe carrying a card balance is better for your credit score than paying what you owe in full every month.
Not true. Outstanding balances can hurt your score when they’re more than 30 per cent of a card’s borrowing limit, according to a big U.S. credit reporting company. “Maintaining a zero balance by paying off all purchases in full each month is best.”
Your credit score is your borrower history distilled into a scaled number that generally ranges from 300 to 900. A growing number of banks, apps, and websites offer online access to credit scores at no cost. On this scale 760 and up is considered excellent, while 660 to 759 is good. Below 660, may impede getting the best rate on a loan or mortgage.
Late payments, running up a big balance on a bunch of credit cards or a credit line can hurt your score, and even adding a new credit card or cancelling a credit card you’ve had for years and replacing it with a new one can hurt your credit score.
Credit scores are actually a product – lots of money is made in gathering, analyzing and presenting this data to lenders. What you need to know about credit scores is very simple: Pay on time and borrow less than you could.
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