5 Steps to Better Credit

[mahon73]

I found these tips and I thought they were helpful.

1. Correct blatant mistakes Your credit score is only as good as what shows up in your credit report. Review your reports from all three credit bureaus for accuracy once a year as well as several months before applying for a loan. Changing a mistake on your report - such as a payment that is wrongly labeled as late -- can take 30 days to three months, sometimes longer.

2. Pay your bills on time This is always a good practice, and it's especially critical that you make prompt payments close to the time you need a loan. That's because a late or missed payment in the last few months is likely to lower your score much more than an isolated late payment five years ago.

3. Reduce your credit card balances A heavily weighted factor in your FICO score is how much money you owe on your credit cards relative to your total credit limit. Generally, it's good to keep your balances at or below 25 percent of your credit card limit, said Jeanne Kelly, founder of The Kelly Group in Brookfield, Conn., which helps clients improve their credit scores.

4. Pay off debt rather than moving it around Since the ratio of your credit card balance to your credit limit is key, closing out an account and transferring the balance simply means you increase that ratio, which is likely to lower your score. In other words, say you owe a total of $2,000 on four credit cards, each of which has a $2,000 limit. Your total credit limit is $8,000, of which your total balance ($2,000) accounts for 25 percent. If you transfer all your balances to two cards and cancel the other two, your total credit limit is reduced to $4,000, and your $2,000 balance now accounts for 50 percent of that limit.

5. Don't close unused credit card accounts near loan time If you have several credit card accounts but are only using a few of them, you'll only raise your balance-to-limit ratio if you close the unused ones. You also shouldn't open new accounts when applying for a loan if possible. If you have a short credit history or very few accounts, opening a new credit line may lower your score since you don't have a proven track record. What's more, a new account will lower the average age of your accounts, another factor in your FICO score.

[Oliver21]

So you've had a few problems getting the bills paid lately, and you're wondering what you can do to repair the damage.

You've got plenty of company. There are more than 30 million people in the United States with credit blemishes severe enough (score under 620) to make obtaining loans and credit cards with reasonable terms difficult.

Or maybe your credit is OK, but you'd like to make it better. After all, the better your credit, the lower the interest rates you can score on mortgages, car loans and credit cards.

New glimpses into the once-secret process of credit scoring have made it easier than ever to improve your credit -- and reversed some of the advice we personal finance journalists once gave consumers about managing plastic.

[krayziebone33]

Thank you for posting this. I found some useful information here.

[quippymcflippy]

I really enjoyed this article. I have been grappling with whether to close one of my credit card accounts in the name of simplicity... looks like it may be a better bet to just keep it at $0.

[dayana]

5 ways t0 improve your credit score

you can follow these tips to improve your rating:

Pay your bills on time. Delinquent payments can have a major negative impact on your score and the longer you pay your bills on time, the better your score. For example, someone with an average credit rating of 707 can raise their score by as much as 20 points by paying all their bills on time for one month.

Keep balances low on credit cards. High outstanding debt can affect your score. Maxing out your credit cards could lower your average score by as much as 70 points.

Don't open a number of new credit cards that you don't need. New accounts will lower your average account age, which could actually lower your score by up to 10 points.

Have credit cards - but manage them responsibly. In general, having credit cards and installment loans (and making timely payments) will raise your score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.

Closing an account doesn't make it go away. A closed account will still show up on your credit report and may be factored into the score.

[krayziebone33]

Originally Posted by dayana

5 ways t0 improve your credit score

you can follow these tips to improve your rating:

Pay your bills on time. Delinquent payments can have a major negative impact on your score and the longer you pay your bills on time, the better your score. For example, someone with an average credit rating of 707 can raise their score by as much as 20 points by paying all their bills on time for one month.

Keep balances low on credit cards. High outstanding debt can affect your score. Maxing out your credit cards could lower your average score by as much as 70 points.

Don't open a number of new credit cards that you don't need. New accounts will lower your average account age, which could actually lower your score by up to 10 points.

Have credit cards - but manage them responsibly. In general, having credit cards and installment loans (and making timely payments) will raise your score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.

Closing an account doesn't make it go away. A closed account will still show up on your credit report and may be factored into the score.

Thank you for adding this part.

[loanstar]

sound tips!
Some may disagree on 5 though; i've read somewhere that too many open but unused accounts reflect badly on your credit rating.

[dollarsaign]

Thank you for the information. This helped me a lot.

[ScrimpAndSave]

I had a mistake on mine that knocked me off 100 pts! I fixed it without a problem, thank God.