One of the most important things that you can do in order to get a loan is to have a good credit score. However, there are many things that most women, let alone most men too, don’t know about how credit scores work and how to improve them. Let’s take a look at how your credit works and how to improve your credit score.

Credit scores are a calculated factor by the three credit reporting agencies that value the credit worthiness of a person to other companies. What this means is it puts a number to how likely you are to pay your bills or not. While this might not seem fair, and there are some issues with how they report data and you can correct it, there had to be a way to let creditors know how good or bad you are with debt.

Most single moms, whether divorced or widowed, might not have had credit before just in their name. Chances are that your credit was also shared with your spouse. This is where a problem can arise. Since you are recently and newly single, if you try to apply for a loan, several things might happen. Since you have no, or a poor credit score, you can expect a higher interest rate, a lower amount they are willing to loan, or denial of your loan request.

But, how do you get credit if you have no past history of credit? There are several ways that you can do this and also improve your credit score. Since more companies are reporting on how you pay your bills, you don’t necessarily have to use a “credit card” in order to improve your credit score.

If you are a renter, then chances are that if you are paying your rent and utilities on time, your credit score is seeing positive results. Your utilities also report to the credit agencies as well. Anytime you are indebted to someone, whether through a loan or bill, they can and often report on their transactions to the credit agencies. As long as you are on time with your payments, you will see your credit score rise over time.

Now, if you have no credit history, then how do you get it? One of the first things people think about is going out and getting a credit card, then maxing it out to pay it off. This doesn’t matter to the credit agencies as they don’t really care about you going to the credit limit on your card (other than to be able to collect all of that interest on it).

You can start off with a small limit on a credit card or if you enjoy shopping at a particular clothing store, you can apply for one of their cards. The key here is to not use it if you can’t afford it. You don’t want to ruin the credit you are trying to build before you even have a chance to build it.

When you make a small purchase on your credit card, when the statement comes, PAY IT OFF! This is where so many people get into trouble with credit cards. Listen to The Dave Ramsey show sometime if you don’t believe me. People calling in with $50,000 in debt or more, just on a credit cards! The bill will eventually come due!

By using your credit card, making small purchases and then paying it off in full each time the bill comes, you are building your credit history.

If you are wanting to find out your credit score, don’t pay for a credit monitoring service or visit any of those credit score websites with the catchy jingles on the television. They are wanting you to sign up for a service that you don’t need. If you are wanting to get your free credit report, don’t buy anything from any company telling you that they will provide you a free credit report for only $1 or any other fee. There are many companies that will sign you up for services that you don’t need. There are also other credit repair services that you can check with and use their services to find out more about your credit score and what you need to do in order to fix your credit.

If you want to get a free credit report that is required by The Fair and Accurate Credit Transactions Act (FACT Act) which allows consumers to get one free comprehensive disclosure of all of the information in their credit file from each of the three national credit reporting companies once every 12 months through a Central Source, visit the main website for the service:

www.annualcreditreport.com

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Filed under: Credit Scores • Free Credit Reports

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