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Managing your credit score

A credit report is a mathematical representation of your credit status. It is calculated based on your financial history and acts as a report card to your financial activities. Your credit report, which contains your credit score might be used to determine if you qualify for a loan, the amount you qualify for and the interests your loan will attract. So, it is very important for you to manage your financial initiatives in order to boost your credit score


Boosting your credit score is not just something that happens overnight, it requires intense discipline and a healthy financial decision over a period of time. And we all know managing our finances is not a walk in the park. But if a good credit score is what you desire, then you will have to invest years of financial discipline into it.

There are steps you might consider in order to get on the road to a good credit score. They include;

Your credit card usage habits hugely impacts on your credit score. The amount of credit you have on your credit card at any given time versus the amount you are spending significantly affects your credit score. The lower the percentage of this ratio the better for your credit score.

The optimum percentage of the spending to the revolving amount in your credit card ratio is 30 and below. In order to increase your score, you should pay your balances in entirety or keep them low. Merging your multiple credit balances with your loan can help you boost your credit score.

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It is important to note that paying your balances in full on a monthly basis while still having a very high utilization ratio won’t actually help boost your scores. The reason behind this is because the bureau uses the balances on your statement to calculate your credit score.

If your plan is to make a huge procurement like a house, a business or a vehicle, then you must be getting together a huge sum of money to service that. If not then you might be planning to go for a mortgage or a loan. And this is where you don’t want the ghost of late payment of bills haunting you.

While bills can be quite a hassle, paying them late does not do any good to your credit report. One of the most important parts of a credit score is the timely payment of bills. The content on your credit report is what basically determines your credit score. If the credit report reports that you are always late on payments, then you can forget about a good credit score and maybe forget about that mortgage, car loan or a business startup cash. This bills might not normally be associated with the credit bureaus but may find their way to your credit report. So pay attention to your bills, settle them no matter how small they are.


There is a belief that having an old debt on your credit report is bad and negatively affects your credit score. Well, this notion is false and removal of old debt from your credit report might in fact hurt your credit score.

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An old debt on your credit report might appear negative but it eventually disappears after a seven year period. Seeking to get a settled old debt from your account is not a good idea. A settled old debt is a good debt for your credit score. It demonstrates that you can handle a debt so well and pay it in time.

One way to improve your credit score is to leave the old settled debt on your credit report for as long as possible. It portrays a person with a good history of credit management and helps you qualify for even higher loans with low-interest rates.

If you take credit for a mortgage or a car, it is advisable to do your shopping within a short period of time. Every single time you apply for a loan, your credit score tanks. This is because making several applications for credit portrays you as someone who intends to use more credit.

However, there are three types of loans that you are allowed to apply for simultaneously without them hurting your score.  They include mortgage, students’ loan and auto loan.

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