If you're working to build up your credit, it significantly helps if you have a goal in mind, . If you’re looking to move into the “Good” or “Excellent” range, I can give you an idea of where to aim.
Credit can be a confusing concept. But if you want to understand your credit scores, you can start by focusing on these 3 areas.
💥💥💥Credit Card Utilization💥💥💥
This is your total available credit and is determined by dividing your total balance by your total limit. Example.. if your limit was $1,000 and you had a $500 balance, your utilization would be 50%.
Pro Tip…! Keep your balance under a 30% utilization it shows lenders that you are responsible and that your not relying too much on your credit cards.
Payment history is reflected as a percentage how often you’ve made payments on time. Paying bills on time shows lenders you’re reliable and more likely to pay back your debts.
💥💥💥Derogatory Marks on Your Credit Reports💥💥💥
Derogatory marks that may affect your credit include accounts in collections, bankruptcies, and foreclosures. Even though tax liens and civil judgements no longer affect your credit scores, lenders may require you to get these resolved before approving you for a loan.
Wherever you’re starting from, improving your credit health could help you improve your overall financial wellbeing. And staying on top of the information in your credit reports is a good first step.