Protect And Improve Your Credit Rating
Your credit score directly relates to the amount of interest you have to pay loans or credit cards. Increasing your score just a few points can make a big difference in the interest rate you will pay for a purchase. If your credit score is high enough, you’ll have no problem qualifying for a lender’s best rates. The following are a few tips about how you can protect and improve your credit rating.
Order Your Credit Report
Your credit score is based on your credit report. You should begin by ordering your reports and reviewing each one for accuracy. You can get your reports directly from the three credit bureaus or from a third party service.
Check Your Credit Report Information for Inaccuracies
Check the identifying information for name, social security number, birth date and address. Make certain that old negatives and paid-off debts are not still on the report. Check for accounts and delinquencies that are not yours, late payments, charge offs, lawsuits, judgments or paid tax liens older than seven years old. Look for paid liens or judgments that are listed as unpaid, duplicate collections, bankruptcies that are older than ten years. Report any inaccurate information right away.
Always Pay Your Bills on Time
Payment history makes up more than a third of the typical credit score. If you paid bills late in the past, you can improve your credit score by paying your bills on time. Lenders are looking for any sign that you might default. Late payments are a good indicator that you are in financial difficulty.
Keep Credit Cards Balances Low
Carrying smaller balances is the best way to increase your credit score. The score measures how much of your limit you use on each credit card or other line of credit, and how much of your combined credit limits you are using on all your cards. Within 60 days, paying down credit card balances can increase your credit score by as much as 20 points.
Try Not to Open In-Store Credit Cards
Although your first credit accounts can serve to build and improve your credit history, there comes a point when subsequent credit applications can reduce your score. New credit cards reduce the age of your credit history. Department store credit cards aren’t a good evidence of credit worthiness. Every time you apply for a retailer’s credit card your credit score will take a hit.
Be Conservative When Applying For Credit
Having at least one credit card that’s more than 2 years old can help your score by 15 percent. Make sure that your credit report is checked only when necessary. If you are shopping for a home, car, or other large purchase,, try to apply for loans all within 14 days. By keeping the loan process within a two-week period, all of the inquiries are seen as one single request.
Don’t Close Credit Cards or Other Revolving Accounts
Shutting down unused accounts changes your utilization ratio. This is the amount of your total debt divided by your total available credit. Closing these accounts will reduce the gap between the credit you are using and the total credit available. That can hurt your credit score.