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7 Ways To Protect And Improve Your Credit Rating
By: G.L. Bycz
Your credit score accounts for the amount of interest you have to pay for a loan
or a credit card. Increasing your score in just a few points will make a big
difference in the interest rate you will pay for a purchase. If your credit
score is high enough, you’ll have no problem qualifying for a lender’s best
rates and terms on auto financing, home loans and small business loans. The
following are a few tips about how you can protect and improve your credit
rating.
1 - Order Your Credit Report.
Your credit score is based on your credit report, so you should begin by
ordering your reports and reviewing each one for accuracy. You can get your
reports from a service such as MyFico.com, or order from Equifax, Experian and
Trans Union separately online or by phone.
2 - Check Your Credit Report Information for Inaccuracies.
Check the identifying information for name, social security number, birth date
and incorrect address. Make certain that old negatives and paid-off debts are
deleted. Check for accounts and delinquencies that are not yours, late payments,
charge offs, lawsuits, judgments or paid tax liens older than seven years old.
Also, paid liens or judgments that are listed as unpaid, duplicate collections,
bankruptcies that are older than ten years and any negative information that is
not yours.
3 - Always Pay Your Bills on Time.
Payment history makes up more than a third of the typical credit score. If you
paid bills late in the past, you can improve your credit score by starting to
pay your bills on time. Lenders are looking for any sign that you might default,
and a late payment is a good indicator that you are in financial difficulty.
4 - Keep Credit Cards Balances Low.
Carrying smaller balances is the best way to increase your credit score. The
score measures how much of your limit you use on each credit card or other line
of credit, and how much of your combined credit limits you are using on all your
cards. Within 60 days, paying down credit card balances can increase your credit
score by as much as 20 points.
5 - Try Not to Open In-Store Credit Cards.
Although your first credit accounts can serve to build and improve your credit
history, there comes a point when each subsequent credit application can reduce
your score. New credit cards reduce the age of your credit history, and a
department store credit card isn’t good evidence of credit worthiness. Every
time you apply for a retailer’s credit card your credit store gets dinged.
6 - Be Conservative When Applying For Credit.
Having at least one credit card that’s more than 2 years old can help your score
by 15 percent. Make sure that your credit report is checked only when necessary.
Or, if you are shopping for a home, try to apply for loans within a two-week
period. By keeping the loan process within a two-week period, all of the credit
report lookups are seen as one single request.
7 - Don’t Close Credit Cards or Other Revolving Accounts.
Shutting down unused accounts that have outstanding balances without paying off
the debt changes your “utilization ratio,” which is the amount of your total
debt divided by your total available credit. It will reduce the gap between the
credit you are using and the total credit available to you, and that can hurt
your credit score.
About the Author:
G. L. Bycz is the founder and developer of http://www.consolidate-credit-card.net
an online source for free tips and information on credit card debt
consolidation, refinancing loans, debt management programs and financial
planning. |
