Your credit score is a numerical gauge of your ability to payback loans. Anytime you want to borrow money or get credit, the lender will look up this score to determine the risk involved in lending to you. The higher the score the better, so if you get a credit report and see a high score that means your credit is good, right?
Pay your bills on time. That's the first advice you'll get when you're looking for ways to increase credit score. This tip seems really simple and obvious, but still many people underestimate its importance. What lenders want to know the most is if and how timely you have paid your bills in the past. That's why 35% of the credit score is based on your credit history. Delinquent payments and collections can severely damage your score. The more recent your payment problems are, the worse. So, in order to increase your credit score, start paying bills on time right now, and your score may already be higher after a month.
Keep your credit card balances low. High outstanding debt may reduce your score. If you max out your credit cards, your score may be lowered even by 70 points. Instead of having one card close to being maxed out, transfer the balance from this card to a few other cards, so you can keep your credit card balances at or below 25% of your credit limits. Paying off debt is even a better way to increase credit score, so if possible, do this, but...
Don't close paid-off accounts! Closing old accounts reduces your total available credit, which in turn changes your utilization ratio (the amount of your total debt divided by your total available credit). This may lower your score. Shutting down your oldest credit accounts shortens your credit history, which also makes you seem less credit worthy, therefore your score can drop.
Get a small loan. In order to qualify for a bigger loan (e.g. mortgage loan) in the future, you have to establish a credit history. If you have little or no credit score, and you prefer to avoid credit cards, acquiring debt is a quick way to start raising your credit score. After all - if you have no debt, how can you show the potential lenders that you are a good borrower, who pays the bills on time? Of course, you have to use this method of building credit score wisely - excessive debt load and a bunch of small loans may backfire.
Do your interest shopping within two-week periods. Each time you apply for a loan and the lender accesses your credit report, your credit score is lowered by 3 points. When trying to find the best interest rate for a loan, keep your loan processes within a focused period of time. This way, all your credit report inquiries are accumulated and will be treated as one single request, when your credit score is calculated.
Pay your bills on time. That's the first advice you'll get when you're looking for ways to increase credit score. This tip seems really simple and obvious, but still many people underestimate its importance. What lenders want to know the most is if and how timely you have paid your bills in the past. That's why 35% of the credit score is based on your credit history. Delinquent payments and collections can severely damage your score. The more recent your payment problems are, the worse. So, in order to increase your credit score, start paying bills on time right now, and your score may already be higher after a month.
Keep your credit card balances low. High outstanding debt may reduce your score. If you max out your credit cards, your score may be lowered even by 70 points. Instead of having one card close to being maxed out, transfer the balance from this card to a few other cards, so you can keep your credit card balances at or below 25% of your credit limits. Paying off debt is even a better way to increase credit score, so if possible, do this, but...
Don't close paid-off accounts! Closing old accounts reduces your total available credit, which in turn changes your utilization ratio (the amount of your total debt divided by your total available credit). This may lower your score. Shutting down your oldest credit accounts shortens your credit history, which also makes you seem less credit worthy, therefore your score can drop.
Get a small loan. In order to qualify for a bigger loan (e.g. mortgage loan) in the future, you have to establish a credit history. If you have little or no credit score, and you prefer to avoid credit cards, acquiring debt is a quick way to start raising your credit score. After all - if you have no debt, how can you show the potential lenders that you are a good borrower, who pays the bills on time? Of course, you have to use this method of building credit score wisely - excessive debt load and a bunch of small loans may backfire.
Do your interest shopping within two-week periods. Each time you apply for a loan and the lender accesses your credit report, your credit score is lowered by 3 points. When trying to find the best interest rate for a loan, keep your loan processes within a focused period of time. This way, all your credit report inquiries are accumulated and will be treated as one single request, when your credit score is calculated.
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Frank Miller has a Debt Consolidation Blog & Finance, these are some of the articles: Important Points That Play A Role In Determination Of The Spot Price Of Gold You have full permission to reprint this article provided this box is kept unchanged.
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