Whether you’re looking to purchase a new home, take out a new line of credit or simply assessing your current financial position, having a good credit score is a must. Here’s how to improve your credit score so that you can meet your short and long term goals. Of course, you’ll first need to obtain a credit report so that you can evaluate your score and spot potential issues.
- Pay Bills On Time – Late payments are the most common pieces of negative information that are posted on credit reports. There are certain loans like mortgage loans that have a more drastic impact, but it’s a good idea to pay all minimum balances on time. Ultimately, you want to avoid having your account sent to collections, not to mention, paying late fees is never fun.
- Keep Credit Card Balances Low – It’s always great to see that your credit card limit has been raised, but you don’t want to reach your maximum limit. Having large balances on credit cards will hurt your credit score, so it’s best to keep your balances within a moderate amount, approximately $350 for every $1000.
- Have Old Bankruptcies Removed – If you had a bankruptcy over ten years ago, make sure it has been removed. It’s not uncommon for bankruptcies to linger on your credit report, but after ten years, they should be wiped clean.
- Spot Potential Errors – Errors are commonplace, even on credit reports, which is why it’s essential that you maintain yours. You receive three free credit reports each year from major bureaus, and you should take advantage of these by printing off the reports and looking for false information.
- Reach Out to Creditors – Although creditors don’t seem to be our friends, working with them is the right attitude to have. If you don’t pay your bill, they don’t get paid, and the cycle continues. If you are faced with a challenging financial time, reach out to the creditors and try to negotiate a compromise.
- Avoid Applying for Too Much Credit – Taking out too many new credit cards will hurt your score. If you can pay for something without taking out a new line of credit, you’re better off paying for the purchase upfront. However, if you’re shopping around and inquire for several loans for the same purpose, this will not have a negative effect on your credit score.
- Separate Your Credit Accounts After a Divorce – Since you don’t want to take the fall for your ex-spouses poor decisions, be sure to close all joint accounts, pay them off or have your name removed. Then start building your own credit by taking out a new credit card.
- Don’t Close Unused Accounts – Having a positive account is beneficial to your credit score, so be sure to leave a few cards open, even if you’re not actively using them. Place them in a safe place and maintain your good standing.
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