7 Tips To Increase Your Credit Score
Having a high credit score can mean the difference
of thousands of dollars of saved interest expense compared to others with
a lower score. For example, if you improve credit score results from the
credit bureaus, just a few points that increase your credit score can make
huge difference in the interest rate you will pay for a home purchase.
It pays to increase your credit score!
The most commonly used credit scores available
to lenders are FICO scores, which is a scoring method created by Fair,
Isaac & Co...FICO!
These scores are provided to lenders by
the three major credit bureaus: Equifax, Experian and TransUnion. Before
we get into some tips how to improve credit scores, it pays to review the
major areas that determine your FICO score.
1. Payment history on credit and retail
store cards, loans and mortgages.
2. Amount that you owe. Credit agencies
look at how many accounts have balances and the proportion of that balance
to the credit line.
3. How long is your credit history? The
longer the better.
4. New credit accounts. Applying for a
bunch of credit cards all at once can hurt your score.
5. Different credit types, such as mortgages,
retail loans, credit cards and installment loans.
6. How many late payments do you have?
Now, with the playing field laid out, let
s work to boost your credit score! Some methods that boost your credit
score take time, months or years, and others areas to improve credit score
can be made with a phone call right now! That said, here are the 7 tips
to raise your credit score!
7 tips to improve credit score
1. Pay your bills on time. Your payment
history is a major factor (35% of your FICO score) in determining your
credit score. If you pay your bills late, or had an account referred to
collections, your credit score will take a major hit.
2. Sign up for online banking and make
sure your regular recurring bills are paid automatically. This way you
will not forget a payment that will wind up reducing your credit score.
3. Increase your credit limit. Another
large factor is the amount of your debt in relation to your credit limit.
If you have a card with a $10,000 credit limit and your balance is $9,000,
this will not help to improve your score. To make the debt/credit limit
ratio look better, you can try to call your credit card company and request
an increase in your credit limit. Don't use the extra credit though! That
defeats the whole purpose and puts you further in debt!
4. Don't apply for many cards at once.
This will not improve your credit score because this is a characteristic
of high credit risk groups.
5. Don t ever close an open credit card
account. If you pay off a credit card down to a zero balance, leave it
open. Remember that a positive factor for your credit score is how much
available credit you have at your disposal when compared to your credit
balance, in addition to the length of your credit history.
6. Apply for loans within a two-week period.
Every time you request a loan and the lender pulls your credit report,
it can hurt your score. It is part of the FICO formula that reasons "this
person is trying to apply for credit and loans and possibly be trying to
live way beyond their means!" If you keep the loan process within a two-week
period, all of the credit report lookups are bundled together as one single
request!
7. Check for errors on your credit report.
Examine your credit report for errors and contact the credit reporting
agencies to fix any errors on your credit report.
If you take action and follow these tips,
you will be able to give your credit score and immediate boost and gradually
increase it even more as time passes. The major keys are to pay your bills
on time and reduce your debt amounts when compared to your credit limit.
This has a twofold benefit of improving your credit score and reducing
your debt.
Copyright © 2005 FinancialTipsForYou.com
Author-Bio: Greg Quincy is the publisher
of the website http://www.financialtipsforyou.com,
offering his insights and personal finance budget tips that he has gained
from working in the financial industry and the economic challenges of raising
a family.
Credit and Loan Resources:
Click
here if you want to know your credit score Right NOW for FREE!
|
