Some Tips for Improving Your Credit Score

There are few numbers as vital to your financial health and well being than the simple three digit number known as your credit score. Your credit rating and credit score are used not only by banks to make lending decisions but increasingly by employers to make hiring decisions as well. The information in your credit report can have a huge impact on your financial future, and it is important to know what others know about you.

Fortunately there are a number of concrete steps smart consumers can take to improve their credit score and their financial standing in the world.

  • Review your own credit report and credit score at least once a year. Perhaps the most important thing consumers can do is to request a copy of their own credit report and credit score once a year. For about $45, consumers can get a package which contains all three of their credit reports plus that all important FICO score.
  • When that package arrives in the mail, be sure to carefully review each report for errors. It is all too common for credit reports to contain erroneous information, and those mistakes can cost you. Be sure to look for accounts you have closed or paid off that may still show as open, bogus late payments and other common mistakes. If you do find an error, be sure to report it to the credit-reporting agency immediately, and follow up to make sure it is gone.
  • Keep your debt low. In most cases the lower the balances on your credit cards and loans, the higher your credit rating will be. Consumers should strive to get all their credit card balances under 30% of available credit.
  • Be careful when applying for new credit cards. With each new credit card application a new lender’s inquiry will appear on your credit report. A large number of inquiries in a short period of time can have a negative impact on your credit score.
  • Do not cancel those old credit card accounts. Many of us carry more credit cards than we need, and it is tempting to reduce our holdings, but be careful about canceling older credit cards. The age of the account factors strongly into the credit score, and canceling old accounts could cost you much needed points.
  • Consider paying your bills automatically. One of the best ways to make sure you will not accidentally miss a payment is to sign up for your bank’s automatic bill payment. Automatic bill payment is a great option for busy people, and it can help keep your credit report clean and your credit score high.
  • Ask credit card companies and lenders to list your credit limit on their report. If the credit limit is not listed, lenders may assume that those accounts are maxed out. The simple act of adding credit limits to those accounts that lack them can raise your credit score significantly.

In addition to the steps listed above, it is important to continue to keep an eye on your credit report. Monitoring your credit report on an annual basis, and giving it an extra thorough review before borrowing money or making a major purchase, will go a long way toward keeping your credit score at the high end of the scale.



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