5 Ways to Improve Your Credit Score
Today’s topic is very interesting - 5 Ways to Improve Your Credit Score
In today’s world, your credit score can have a significant effect on the financial aspects of your life. Your credit history determines loan and credit card interest rates, can raise your insurance premiums, and can even be a determining factor for getting a job.
Here are 5 Ways to Improve Your Credit Score
1. Pay Your Bills on Time
Your bill payment history accounts for roughly 35% of your credit score, and includes payment of credit cards, auto loans, mortgages, and utility bills. Recent late payments in your credit history have the greatest impact on your score. Use online reminders to help you remember to pay your bills, and inquire at your bank or check with your credit card company to see if they offer email reminders about due payments.
2. Review Your Credit Report on a Timely Basis
Inaccurate or outdated information can appear on your credit report at any time, and this can significantly hurt your credit score. Identify and correct errors on your credit report quickly using the following steps:
• Request a Free Copy of Your Credit Report. You can order your free credit report online from AnnualCreditReport.com. This is the only website that offers free credit reports, and provides access to reports from each of the three major credit reporting agencies. You can also receive a free credit report if you are denied credit.
• Review Your Credit Report. Once you obtain a copy of your credit report, review your contact information to make sure it is correct. Look for inaccurate information, outstanding balances, and late payments. If any inquiries seem unusual, research to find out why they are being made on your account.
• Check Carefully for Bankruptcies and Charge-Offs. Review the details for any bankruptcies and charge-offs on your credit report to ensure their accuracy.
• File a Dispute. If you find errors or incorrect information on your credit report, file a claim to dispute and fix the errors with the reporting agency.
3. Never Close Old Lines of Credit
Many people believe that consumers should close old or unused lines of credit to improve credit scores. Actually, it may be more advisable to keep these lines of credit open.
A large portion of your credit score (approximately 30%) is determined by the amount of available credit you are using.
If you have a few credit cards that you no longer use, don’t let them languish – instead, use them occasionally for a few small purchases and pay them off in full each month. If you don’t use the cards, the issuers may reduce your credit lines or close your accounts. Closing a credit card hurts your credit score.
4. Open New Credit Judiciously
Based on the previous point, you might think that opening multiple new lines of credit will improve your credit score. This isn’t true, however, as opening several new lines of credit in a short period of time will negatively affect your score.
New credit accounts for about 10% of your score, and credit reporting agencies constantly monitor your activity, so open new lines of credit judiciously.
5. Carefully Mix Credit Lines
The mix of credit lines accounts for about 10% of your credit score. If you have a mix of credit cards, loans, and other types of credit, you can positively impact your score. Walk this line carefully so that you do not overextend yourself, however.
If you have any questions about your credit score feel free to call me, Mike Cribbin at 314-954-6500 or drop me an email at [email protected]