< How to Improve Your Credit Score>
1=Obtain your credit report and score from a national credit bureau.
The first thing you need to do is know where you are now, in order to
know where you're going or want to go. Unlike your credit report, which
you can get for free once a year, your score does not come free but it's
a small cost and well worth paying for
* Be sure to get the real FICO credit score because it is the score that
most creditors use. So far, only three entities supply this score
directly to consumers––do a search online for Transunion, Equifax or
Experian, make your own selection and follow the instructions they
provide individually.
*You're considered to be a poor risk if you have a credit score under 620
2=Resist responding to all those "pre-approved" credit card offers you get in the mail.
This also includes offers sent to you online. It's easy to think along
the lines of, "What can it hurt to apply? They say I'm already
approved." The reality is that these easily approved credit cards can
and
do hurt. Each time one of the national credit bureaus receives an inquiry, your score goes down a few points.
* This includes store card accounts; the less you have, the better.
* The fact that frequent checking harms your score also means that you need to avoid checking your score compulsively.
3= Avoid jumping from credit card to credit card. If you
"transfer your balance" - a scheme that doesn't hurt you, and gets you
0% interest on your balance for a period of time, sometimes as long as a
year - don't close the old account. Your credit history looks better to
the credit bureaus if you have long-standing, established accounts.
This looks good even if many of your accounts are never used anymor
4= Be stable. There are several ways to impress the stability of your life on a credit score reviewer:
Buy your own home. Owning a home is viewed as considerably better than
renting one. Although affordability of housing has changed in recent
years, owning a home is still within the reach of many who save
regularly and spend within their means.
* Avoid moving around a lot. If you physically reside at the same address
for a long time it is better for your credit history than if you move
frequently.
* Get married. If you examine two people with very similar credit
histories, the one who is married will have a markedly higher credit
score than the single person. Strange, but true!
5= Rely on your seniority in age. This you really can't
do anything about, being older, but at least there's something good
about aging! Age is another personal characteristic that the credit
bureaus factor into their ratings. Older is better. Even though you
cannot magically increase your age (and who'd really want to do this,
anyway?) it is nice to know that as time goes by, your credit score
automatically improves.
6=Pay your bills on time, regularly. This is actually
first in the order of things you must do to better your credit score.
Each late payment dings your credit score and presents a picture of
unreliability. You must determine that, going froward, you will be
paying your bills on time. The biggest chunk of your credit score is
based on your payment history
7= Reduce your debt to credit ratio. The next big chunk
of your score after your credit history, is determined by the balance on
your available credit. Seek to keep your balance at approximately 30
percent of limit, or less. This means that if your credit card limit is
$1000, you should aim at having a balance of not more than $300.
* Having high available debt and low indebtedness helps a lot. In other
words, if you have lots of available credit, and little or manageable
debt, that looks better than being in hock up to your eyeballs, or just
having no established credit at all.
* If you pay off your credit cards in full anyway, consider paying them
off a day or two before the billing cycle is closed (check online for
the day, and the current total). That way, your bill will show a very
small or even negative amount, which gets reported to the credit scoring
institutes. This increases your credit score up to 50 points
(everything else unchanged).
8= Dispute things on the credit report that are 'wrong'.
You can generally get one 'bad thing' off each credit report every
year. Keep at it consistently if you used to be a 'bad person', at least
as far as the credit card companies are concerned. With persistence and
patience, you can whittle down the black marks over time.
* When reporting errors (inaccuracies or incompleteness) or fraudulent use
of your identity, provide all the forms of proof that you have, such as
cancelled checks, stamped invoices, police reports, etc.
* If you have some late payments showing on your credit report, these can
really hurt your score. Collections, judgements and tax liens are
devastating. You can negotiate for removal of such negative notations.
The ways of going about this are beyond the scope of this article.
* Be aware that unlike what you may have heard or read elsewhere, getting
negative information removed from your report is not an easy thing to
do. Be persistent, factual and patient.
9= Note that 'paying off' loans increases your score.
Oddly enough, occasionally refinancing and trading in cars with loans on
them 'pays off' loans, too. If you do refinance, do it for no points
and a lower rate.
10= Get out of debt. Getting rid of as much of your debt as you can is the first and most important step in improving your credit
* Get rid of your credit cards as you pay them off. Too much credit can be
a bad thing. Try and keep your older cards, but get rid of the rest.
* Budget, budget, budget. Creating a budget will help you get rid of your
debt, improve your credit, and stay out of debt. While the credit
bureaus won't see your budget, it will see the good results of you
sticking to it.
11= Build up different types of credit. A "healthy mix" of different types of credit builds up you score better than does simply one type. For example:
* Let's say two persons have $10,000 total in total credit each, and both
are making timely payments. One has only one credit card. The other has a
credit card, a car payment and a bank line of credit (overdraft
protection). The second person's score will often be much better than
the first one's.
Good Luck