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10 Things You Can Do To Improve Your Credit Score

Monday, 01 June 2015 15:27
10 Things You Can Do To Improve Your Credit Score

Only 10 percent of Americans actually know their credit score.

Those are the findings of a survey commissioned by TrueCredit.com, a subsidiary of the credit bureau, TransUnion. “It is shocking how little Americans know about their credit,” said John Danaher, president of TrueCredit.com. “Good credit is a cornerstone of your financial profile, enabling you to finance major purchases, such as a home, education, or car.” Then, he added, “Not knowing about your credit can expose you to higher interest rates which translates into less money in your pocket at the end of the day.”

When you apply for credit, your credit scores help lenders determine whether or not you are able to repay the loan based on your past financial performance. With a higher score, you qualify for better interest rates, higher credit limits and more types of credit than you would with a lower score. Your score reflects the way you use credit – there are no quick fixes that allow you to get a good score. However, you can raise your score over time by demonstrating that you consistently manage your credit responsibly.

Here are 10 things you can do to improve your credit score.

1. Pay your bills on time.
If you have a history of paying your bills on time, you’ll have an easier time getting a mortgage loan, car loan, or credit cards. Even if you’ve had serious delinquencies in the past, a recent history (24 months) of on-time payments carries weight in credit decisions.

2. Keep your credit card balances low.
High outstanding debt can pull your score down.

3. Check your credit report for accuracy.
Inaccurate information on your credit report can be cleared up easily. Always contact the original creditor and the credit bureaus whenever you clear up an error so that the inaccurate information won’t reappear later.

4. Pay down debt.
Consolidating your credit card debt or spreading it over multiple cards will not improve your score in the long run. The most effective way to improve your credit is by slowly paying down the amount you owe.

5. Use credit cards – but manage them responsibly.
In general, having credit cards and installment loans that you pay on time will raise your score. Someone who has no credit cards tends to have a lower score than someone who has already proven that he can manage credit cards responsibly.

6. Don’t open multiple accounts too quickly, especially if you have a short credit history.
This can look risky because you are taking on a lot of possible debt. New accounts will also lower the average age of your existing accounts which is something that your credit score also considers.

7. Don’t close an account to remove it from your record.
Inaccurate information on your credit report can be cleared up easily. Always contact the original creditor and the credit bureaus whenever you clear up an error so that the inaccurate information won’t reappear later.

8. Shop for a loan within a focused period of time.
Credit scores distinguish between a search for a single loan and a search for many new credit lines, based in part on the length of time over which recent requests for credit occur.

9. Don’t open new credit card accounts you don’t need.
This approach could backfire and actually lower your score.

10. Contact your creditors or see a legitimate credit counselor if you’re having financial difficulties.
This won’t improve your score immediately, but the sooner you begin managing your credit well and making timely payments, the sooner your score will get better.

These ideas won’t dramatically improve your credit score overnight, but they will over time. Remember, it takes time to develop a strong profile, but once you’ve done it, you’ll find it a lot easier to apply for credit and get favorable interest rates.

Visit CAP COM’s Learning Center to access more educational resources or to register for an upcoming workshop, or call at 518-458-8986 to schedule a personal financial checkup with a CAP COM expert.