Improving Your Credit
If your credit score isn’t as high as you would like it to be there are a few things you can to raise your score.
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1. Pay all bills early. Paying your bills early serves two purposes. First, because interest is accrued daily you save on interest if you pay when you receive the bill rather than on the due date. Second, if you make it a habit of paying bills when you they arrive there will be less of a chance that you will forget the bill. 2. Use online banking. Most banks will offer online banking for free. This is a great tool to help pay your bills on time. It gives you the option of paying a set amount every month or, with some creditors, will actually pull the bill and pay the amount owed every month. If you pay a set amount, be sure it is higher than it needs to be since the amount due can vary. |
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3. Pay off credit cards. The goal here is to have the smallest percentage of debit to credit limit as possible. You should never have more than 50% of a credit card used up, but 25% or less should be your goal. If you are having trouble paying down the balances, ask for an increase on your credit limit, but don’t put any new charges on the is card, this will lower your ratio and improve your credit score. 4. Do not close seasoned accounts. Lenders are looking for accounts that have been open for several years. If you have a credit card that you got five years ago, closing that account will actually hurt your credit rather than improve it. The older the account the better. |
| 5. Stay away from new accounts if it can be avoided. Getting a department store credit card may save 10% on your purchase, but it will hurt your credit. If you know you are going to apply for a home or car loan, do not open any accounts at least six months prior to the anticipated date you will apply. If you do not have any seasoned accounts then apply for some now. Most lenders like to see at least three of them.
6. Be careful when comparing rates online. Once you are ready to get your loan it is a good idea to find the lowest rate possible,however inquires hurt your credit so be careful. Because the bureaus understand the borrowers may want to shop rates, they bundle inquires by type. If you are applying for a home mortgage and four different lenders pull your credit, it will only count as one inquiry as long as you do it all within two weeks. The same is true for an auto loan. It is not the same when applying for a credit card though. |
