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How to Build a Worthy Credit Score

By Ruth Racey
Published: Wednesday, November 25th, 2009

A person’s credit score can have a great impact in his/her financial decisions.  Aside from lending companies and credit card issuers, insurance companies and landlords can gauge your credit worthiness based on how high or low your credit score is.  In fact, even potential employers may doubt your sense of responsibility and work ethics if your credit report shows a very poor score.

However, you may ask, what is a good credit score? Based on the FICO scoring model, a person’s rating can range from a low of 300 to a high of 850 points.  Reaching a 700-point rating is often considered as fair or average while a 750-point rating and above is considered as excellent or outstanding.

The less favourable scores would be 650 points and below.  If your credit score is currently at 600 points or lower, lenders will consider you as high-risk or less “credit worthy” borrower.  Needless to say, you may find it more difficult to apply for loans, credit cards or even low-rate insurance if you have poor ratings.

Still, it does not mean that you can never reach a worthy credit score again.  To rebuild bad credit, you need to make sure that there are no unpaid bills in any of your accounts.  You need to be up to date in submitting payments.  To make sure that you can focus on paying bills, avoid incurring new charges until you manage to pay off all debts.

To build a good credit score, you need to be conscious about payment habits.  If there are instances when you cannot submit payment on time because of an emergency, call your creditor right away and give them a heads up.  Let them know that you will not be able to submit payment on the due date because of a valid reason. 

More importantly, give your creditor the exact date of when you plan to submit payment.  If your creditor agrees, ask them not to report it to the bureaus as late payment.  Most creditors would give consideration on this matter as long as you have a good reason why you will fail to pay on time.

Building good credit may take some time especially if your current score is below the average rating.  Depending on your credit status, it can take 6 months or more before you can see some improvement in your FICO score.  However, do not give up and just stick to your payment schedules.  When you finally reach the ideal score, do not let up and continue to be a responsible borrower to maintain a good credit history.

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