Your credit score accounts for the amount of interest you have
to pay for a loan or a credit card. Increasing your score in
just a few points will make a big difference in the interest
rate you will pay for a purchase. If your credit score is high
enough, you'll have no problem qualifying for a lender's best
rates and terms on auto financing, home loans and small business
loans. The following are a few tips about how you can protect
and improve your credit rating.
1 - Order Your Credit Report. Your credit score is based on your
credit report, so you should begin by ordering your reports and
reviewing each one for accuracy. You can get your reports from a
service such as MyFico.com, or order from Equifax, Experian and
Trans Union separately online or by phone.
2 - Check Your Credit Report Information for Inaccuracies. Check
the identifying information for name, social security number,
birth date and incorrect address. Make certain that old
negatives and paid-off debts are deleted. Check for accounts and
delinquencies that are not yours, late payments, charge offs,
lawsuits, judgments or paid tax liens older than seven years
old. Also, paid liens or judgments that are listed as unpaid,
duplicate collections, bankruptcies that are older than ten
years and any negative information that is not yours.
3 - Always Pay Your Bills on Time. Payment history makes up more
than a third of the typical credit score. If you paid bills late
in the past, you can improve your credit score by starting to
pay your bills on time. Lenders are looking for any sign that
you might default, and a late payment is a good indicator that
you are in financial difficulty.
4 - Keep Credit Cards Balances Low. Carrying smaller balances is
the best way to increase your credit score. The score measures
how much of your limit you use on each credit card or other line
of credit, and how much of your combined credit limits you are
using on all your cards. Within 60 days, paying down credit card
balances can increase your credit score by as much as 20 points.
5 - Try Not to Open In-Store Credit Cards. Although your first
credit accounts can serve to build and improve your credit
history, there comes a point when each subsequent credit
application can reduce your score. New credit cards reduce the
age of your credit history, and a department store credit card
isn't good evidence of credit worthiness. Every time you apply
for a retailer's credit card your credit store gets dinged.
6 - Be Conservative When Applying For Credit. Having at least
one credit card that's more than 2 years old can help your score
by 15 percent. Make sure that your credit report is checked only
when necessary. Or, if you are shopping for a home, try to apply
for loans within a two-week period. By keeping the loan process
within a two-week period, all of the credit report lookups are
seen as one single request.
7 - Don't Close Credit Cards or Other Revolving Accounts.
Shutting down unused accounts that have outstanding balances
without paying off the debt changes your "utilization ratio,"
which is the amount of your total debt divided by your total
available credit. It will reduce the gap between the credit you
are using and the total credit available to you, and that can
hurt your credit score.
About the author:
G. L. Bycz is the founder and developer of
http://www.consolidate-credit-card.net an online source for free
tips and information on credit card debt consolidation,
refinancing loans, debt management programs and financial
planning.
