Your credit score is a picture of your financial behavior. It is established on a scale of 300 to 900. When you want to borrow money from the bank, get a credit card, rent an apartment and even buy a cell phone plan, your rating is checked
5 things that help you get more points
Do you repay the minimum balance required monthly, BEFORE the due date of your loans (including your credit card)?
To have a good score, you must use credit at a ratio of less than 30%. What does that mean?
Nothing better than an example to fully understand:
- You have a bank line of credit of $5,000 and a credit card with a line of $1,000.
- Your total available credit is therefore $6,000.
- You owe $400 on your card and $2,000 on your line, total $2,400.
You have to calculate the credit used split by the total available credit
➡️ $2,400 (your used credit) ÷ by $6,000 (your available credit) = 0.4
➡️ that you multiply by 100 to obtain a percentage: 0.4 × 100 = 40%
The ratio is more than 30%, it harms you. To have a utilization rate of less than 30%, your maximum amount of credit used should be less than $1,800 (6,000 x 30%)
It’s in your best interest to choose your credit card carefully to avoid having to change it. The longer you keep it, the better. Otherwise it can be interpreted as instability or a lack of funds.
Each new credit request influences your rating. It can recover after a few weeks, provided that the other criteria are respected.
- The number and type of debts
Having several types of credit (personal loan, line of credit, car loan) can improve your score, but be careful with debt, make sure to keep your utilization rate below 30%.
If you faithfully repay your various sources of credit (personal loan, credit cards, line of credit, etc.) evaluators see this as proof of your reliability.
