How to improve your credit score?
Improve Your Credit Score
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Improve Your Payment History
Keep Debt to a Minimum
Length of Your Credit History
Manage New Credit Wisely
The Types of Credit You Use
- Always pay your bills on time. Late payments play a major role in
driving down your score.
- If you have past-due bills now, get current and stay that way.
- Contact your creditors as soon as you know you will have a problem
paying bills on time. Try to work out a payment arrangement and
negotiate with them to keep at least a portion of the late notations off
of your credit reports.
- If your situation is serious, see a legitimate, non profit credit
counselor. Avoid the scam artists who promise a quick reversal of
your credit problems.
Keep Debt to a Minimum
- Keep your credit card balances low. High debt-to-credit-limit ratios
drive your scores down.
- Pay off debt, don't move it around. Owing the same amounts, but
having fewer open accounts, can lower your score if you max out the
accounts involved.
- Don't close unused accounts, because zero balance might help
your score.
- Don't open new accounts that you don't need as a quickie approach
to altering your debt-to-credit-limit ratios. That can lower your score.
Length of Your Credit History
- Time is the only thing that can improve this aspect of your scores,
but you can manage it wisely:
- Don't open several new accounts in a short period, especially if your
credit history is less than three years. Adding accounts too rapidly
sends up a red flag that you might not be able to handle your credit
responsibly.
Manage New Credit Wisely
- Several credit inquiries during a short period means you are
attempting to open multiple new accounts, and that lowers your
credit scores.
- Credit scoring software usually recognizes when you are shopping
for a single loan within a short period of time, such as a home loan.
If multiple inquiries are necessary, have them pulled as closely
together as possible.
- Checking your own credit report does not affect your scores.
- Do try to open a few new accounts if you've had credit problems in
the past. Pay them on time and don't max out your credit limits.
The Types of Credit You Use
- A mixture of credit cards and installment loans, loans with fixed
payments, can help raise your score if you manage the credit cards
responsibly.
- Having many installment loans can lower your scores since
payments remain the same until balances are paid in full.
- Don't open new accounts just to have several accounts or to attempt
a better mix of credit. - Closing an account doesn't remove it from your report. It may still be
considered for scoring purposes.