Easy Steps You Can Take To A Better Credit Score

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credit card paymentsHaving a good credit score is important for several reasons. Lenders reward loan applicants who have higher credit scores with better interest rates. You can save thousands of dollars over the life of a loan simply by having a lower interest rate. A higher credit score can also help you qualify for a car or home loan. Some places of employment, such as businesses in the financial industry, may require that their employees have fair credit ratings. There are several ways that you can raise your credit score.

Choose Cards Carefully

Several stores offer special promotions for customers who will open an account with them. It can be tempting to sign up for these offers when you are making purchases at a store. If you do not have any credit, then a store credit card can be a good way to establish credit. However, if you have an established credit history, then you should limit the number of accounts that you have open.

Before you agree to open an account with a store, consider whether it would help or harm your credit score. If you have opened several accounts within the last year, then it may be best to sacrifice the special being offered by the store in favor of keeping a higher credit score. Lenders will typically review your credit history for the past several months when you apply for a loan. They may question your credibility if you have opened many accounts recently.

You may be tempted to close older credit cards that you no longer use, but many financial planners advise against this. One of the factors that lenders will look at when examining your history is the average age of your credit accounts. While newer accounts can decrease the average age, older accounts increase it. This means that old accounts that you do not use can actually help your score because they increase the length of your credit history.

Make Timely Payments

A large part of your score is determined by your payment history, which means it is important to make timely payments on all of the accounts that you have. Once you have a missed payment on your record, it can have a lingering impact on your credit score. Setting up automatic payments can help prevent you from forgetting to make a payment. If you carry balances on your credit cards, then try to make payments that are at least a bit above the minimum that is required.

If you do not want to set up automatic bank drafts for payments, then a calendar that has the due date listed for each payment can be a useful tool to help you keep track of bills. This is especially true if you have a large number of bills that must be paid. Lenders will be pleased to see that you have a history of paying bills on time.

Manage Your Debt

Another large part of your credit score is determined by the outstanding amount that you owe. Many lenders will look at the ratio of debt that you have in comparison to your income. Try to make a plan to pay off your debt as reasonably soon as you can. Emergencies will happen, and having credit to use during those times can be important.
However, it is also important to stay focused on your financial goals. Making consistent payments that are above the minimum can help you pay off the balance quickly.

If you have past due accounts, pay those off as quickly as possible. Once past due accounts are paid off, they still may reflect on your report for several months. This is why it is imperative to keep your accounts current.

Keep Track of Your Report

It is also important to make sure that you are aware of what information is on your credit report. This will give you a chance to dispute any incorrect information. Obtaining a Free Credit Report can help you correct mistakes as quickly as possible. If you are not aware of what is on your credit report, then lenders may be using incorrect information when they decide whether or not to offer you a loan or an incredible interest rate.

Your credit report will help you keep track of all of the accounts that you have open, your current balances and the length of your credit history. Your report also explains how these factors combine to formulate your credit score. Any negative information will show up as well.

These tips can make a dramatic difference in your credit score. Increasing your score by even a few points can help you secure a loan, since many interest rates and loans require a specific minimum score. A lower interest rate will give you reduced monthly payments that can help you achieve your financial goals.

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