Author Topic: 10 Ways To Increase Your Credit Score  (Read 2479 times)

Dementoid

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10 Ways To Increase Your Credit Score
« on: February 27, 2015, 03:40:53 PM »
Your credit score is a number that is used by lenders to get an idea of how credit-worthy you are. Your credit score is determined by three credit reporting bureaus,  TransUnion, Equifax, and Experian. These companies use a very guarded algorithm to work out your credit score.

Your credit score becomes important when you are wanting to make a large purchase that will require credit, such as a house or new car. It's a good idea to keep an eye in your credit score just so you have an idea of where you stand. You can buy your credit score from companies who provide such a service. A credit score of over 700 is considered good and above 760 is considered to be excellent. The higher your credit score is, the easier time you will have. In today's article, we'll be looking at 10 ways you can increase your credit score.

1. Check your credit report for errors
You can check your credit report once a year for free from each of the bureaus, so it's worth making this request once every four months. Look out for errors and be sure to fix them so they don't reflect badly on you. You want to be looking out for things like negative listings that aren't yours such as late payments, credit limits that are being reported as lower than they really are, any accounts that you paid on time that aren't listed as "current" or "paid as agreed", negative listings that are older than seven years and should therefore no longer be listed (ten years for bankruptcy).

2. Always pay your bills on time
Payment history is one of the biggest factors when it comes to calculating your credit score. Be sure to always pay your bills on time and take steps to make sure you don;t forget. Put reminders in your calendar. Be consistent.

3. Use about 25% of your credit at a time
This goes for any and all credit that is available to you. If you have credit cards and home equity then calculate the credit limits for each of them and then calculate 25% to 30% of that number.

4. Get a credit limit increase
As the economy improves, some money lenders are getting more flexible with their customers credit limit. Getting your limit increased will help with the above tip. If you are unable to get a credit increase, make several payments to your card each month to keep the ratio down.

5. Keep your lines of credit open
Even if you don't use your credit card, keeping it open can help boost your score. This also applies to the 220%-30% ratio we mentioned earlier. The more credit that you have available, the lower the ratio to debt credit will be. Be sure to keep the unused cards safe!

6. Limit the number of inquires from credit applications

Keeping the number of inquires you make low will boost your score. If you want to take advantage of some new reward specific credit cards then be sure to do all the applications within two days. This will then only count as one inquiry whereas spreading them out will hurt your credit score.   

7. Keep a credit card and an instalment loan open
A great way to boost your credit score is to show that you are responsible and can handle the two major types of credit, revolving (credit cards) and instalments (personal loans, cars, house, etc). If you don't already have one, you ought to consider opening an instalment account.

8. If you don't have one, get a credit card
If you're trying to get credit for the first time, ask a parent or trusted friend to make you an authorised user on their account. This will give you credit from the whole account history, not just from the point at which you joined. Be careful though, the primary account holder will get the damage if you over spend and you will also get be blamed if the primary account holder defaults on the account.

9. Use your oldest credit card from time to time
Having a long credit history is another important factor in determining your credit score. Be sure to keep your oldest card active by using every so often, or else it won't hold the sway that other, more active, cards will.

10. Don't have too many active cards

Credit bureaus may lower your score if they think you have too many cards, even if your balances are small. If you have several cards, then pay off the smallest ones and try to focus on having two cards for regular spending.