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We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
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At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our banking reporters and editors focus on the points consumers care about most — the best banks, latest rates, different types of accounts, money-saving tips and more — so you can feel confident as you’re managing your money. Bankrate logo Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. If you have a history of late payments and a poor credit score, the good news is you can turn your credit around. A credit score is simply a snapshot of your credit at a particular point in time. Your credit score changes continually based on your spending, saving and bill-paying. Here’s what you need to know. Credit score basics
Credit scores are calculated based on information in your credit report. FICO, the credit scoring company, provides credit scores to 90 percent of all lenders. FICO scores range from 300 to 850. There is no score that specifies whether your credit is good or bad. Lenders have their own standards that determine whether you’re creditworthy and what type of interest rate you qualify for. However, a FICO score of 700 or above is generally considered good. A FICO score of 740 to 799 is very good and 800 to 850 is exceptional. If your credit score falls below 700, your first goal should be to get your credit score above that number. Check your credit report
If you haven’t already checked your credit report, request a copy from one of the credit reporting agencies — Experian, Equifax and TransUnion. By law, you’re entitled to one free credit report per year from each agency. You also have a right to a free copy of your credit report if you have been denied credit within the past 60 days. If you find inaccurate or missing information on your report, file a dispute with the credit reporting agency and the creditor. Make sure to clearly communicate what you’re disputing and provide supporting documents, such as payment statements or processed checks. The credit reporting agency must investigate your dispute, usually within 30 days. For the creditor, it may take 30 to 90 days to communicate with you as well as the credit bureau. Make payments on time
Consistently making your payments on time is the best way to improve your credit score. Your payment history determines 35 percent of your FICO score. According to Experian, payments that are a few days late rarely appear on your credit report. Payments that are late by 30 days or more will likely appear on your credit report. If you’re having problems making payments, contact your creditor to find what your options are. Your creditor may be able to establish a payment plan that doesn’t hurt your credit score. As you consistently make on-time payments, your credit score will improve. While late payments stay on your credit report for seven years, the late payments will have less impact on your credit score as time passes. Reduce your debt
Your credit utilization ratio is the amount of debt you have compared to your amount of available credit. It’s calculated by dividing your total debt by your available credit. For example, if you have $10,000 in debt and $20,000 of available credit, your credit utilization ratio is 50 percent. An ideal credit utilization ratio is 35 percent or lower. Your credit utilization ratio determines 30 percent of your credit score. The best way to improve your credit utilization ratio is to lower your debt, thereby increasing the amount of credit you have available. Experts recommend paying as much as you can on your account with the highest interest. When the high-interest account is paid off, apply the money to the next high-interest account, and so on. FICO does not recommend opening new credit accounts to improve your credit utilization ratio. This is because hard inquiries made on your credit report can negatively impact your credit score. To be sure, there’s no quick way to fix your credit score. But as you consistently make on-time payments and reduce your debt, you’ll see your score increase over time. SHARE: Michelle Spitzer Related Articles