In school, the most important number
to us was our GPA. After graduation that number is your credit score.
This number determines the interest rate you get on cars, credit
cards, home purchases, etc.
Listed below are five ways to increase your credit score:
1) Get a copy of your credit report
Obtaining a copy of your credit report is a good idea because if
there is something on your report that is incorrect, you will raise
credit score once it is removed. Make sure you contact the bureau
immediately to remove any incorrect information.
Your credit report should come from the three major
bureaus: Experian, Trans Union and Equifax. It's important to know
that each service will give you a different credit score.
2) Pay Your Bills On Time
Your payment history makes up 35% of your total credit score. Your
recent payment history will carry much more weight than what happened
five years ago.
Missing just one months payment on anything can
knock 50 to 100 points off of your credit score.
Paying your bills on time is a single best way
to start rebuilding your credit rating and raise credit score for
3) Pay Down Your Debt
Your credit card issuer reports your outstanding balance once a
month to the credit bureaus. It doesn't matter whether you pay off
that balance a few days later or whether you carry it from month
Most people don’t realize that credit bureaus
don’t distinguish between those who carry a balance on their
cards and those who don’t. So by charging less you can raise
credit score even if you pay off your credit cards every month.
Lenders also like to see a lot of of room between
the amount of debt on your credit cards and your total credit limits.
So the more debt you pay off, the wider that gap and the better
your credit score.
4) Don't close Old Accounts
In the past people were told to close old accounts they weren’t
using. But with today's current scoring methods that could actually
hurt your credit score.
Closing old or paid off credit accounts lowers
the total credit available to you and makes any balances you have
appear larger in credit score calculations. Closing your oldest
accounts can actually shorten the length of your credit history
and to a lender it makes you less credit worthy.
If you are trying to minimize identity theft and
it's worth the peace of mind for you to close your old or paid off
accounts, the good news is it will only lower you score a minimal
amount. But just by keeping those old accounts open you can raise
credit score for you.
5) Stay Out Of Bankruptcy
Bankruptcy is the single worst thing that will
destroy your credit score. Bankruptcy will lower your credit score
by 200 points or more and is very difficult to come back from.
Once your credit score falls below 620, any loan
you get will be far more expensive. A bankruptcy on your credit
record is reported for up to 10 years.
The reality of a bankruptcy is it will limit you
to high-interest lenders that will squeeze out high interest rate
payments from you for years.
It is better to get credit counseling to help you
with your bills and avoid bankruptcy at all costs. By getting credit
counseling instead of declaring bankruptcy you can raise credit
score over a much shorter period of time.
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