Your credit score is one of the main factors that is used to determine your ability to obtain credit as well as how fast you can be approved when taking out a loan. With a poor credit score it is very difficult to obtain a loan and that is why improving your credit score is very important. There is also another group of people called the high risk category who are offered credit at a higher interest than someone who has a higher score. But there are several ways of improving credit.
Pay your bills on time. This sounds very obvious to everyone but what most people don’t know is that making payments late is one of the most common forms of negative information that appears on people’s reports and is one of the main factors that lead to people scoring poorly on credit reports. To improve your credit score pay your bills in good time. These include credit card payments, mortgage payments and so on.
The other way of improving your credit score is by keeping your unused accounts open. In deciding how much each one scores on the credit score sheet, one can get better marks for having a long lasting relationship with a creditor. An account that has been unused for a long time is also considered to have been having a good relationship with the creditor. In short if you avoid closing your inactive accounts and letting them run for as long as they can, you are improving credit. Having several credit cards even though you actually use only one or two can be very helpful in the long run.
Maintain your credit balances low. Your credit card balances are also another factor that is considered in computing your credit score. If you have a balance that is above 35% of your total available credit limit will be to your disadvantage. This is regardless of whether you pay your bills on time or keep your accounts open. If you are keen on improving your credit score maintain a balance that is reasonably low as you also consider other factors that make an impact on your credit score.
Don’t apply for credit unless it’s needed. There is no need of applying for a credit card that you will use only a few times and throw away when you can easily meet the same cost using another credit card. Obtaining many cards within a short period of time hurts your efforts of improving credit.
Readers: What are your experiences of improving credit score? Have additional forms of improving credit? Let’s hear your thoughts!