November 7th, 2011
100 Words or Less: 3 Top Credit Score Questions
2 Comments |
Have you checked out our Credit Advice Center lately? We get new questions everyday from people just like you wondering what makes credit scores tick. We took three of the most common questions and we’re giving you a quick and succinct answer, in 100 words or less.
How do I improve my credit score?
One of the best ways to improve and maintain your credit score is to keep your credit card utilization under 30% of your available balances. Calculate your credit utilization rate by adding up all of your credit card balances and dividing that number by your credit limits. The higher this rate, the less creditworthy you’ll be in the eyes of lenders. Read more about breaking out of your credit score rut.
Why did my score go down?
There are several reasons why credit scores drop, from closing an old credit card account to making a late payment to having an account in collections. Perhaps the most common is closing old credit card accounts. You may be tempted to close an old credit card account because you no longer plan on using it, but you’ll shorten your credit history and decrease your available credit. Read more about reasons why credit scores drop.
How often does my credit score change?
It can change at any point. For instance, if you apply for an auto loan, the hard inquiry from the credit application should instantly be reflected on your credit report and your credit score will decrease by a few points. As for other activities, creditors typically report new balances, payment activity, credit limit changes and late payment information every 30 days, which means it’s a good idea to update your free credit score on Credit Karma at least once a month.