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TIPS FOR A BETTER CREDIT SCORE
(These tips are universal, timeless, and proven to work – every time)
• Pay your bills on time.
Delinquent payments and collections can have a major negative impact on your
credit score.
• Get current and stay current.
If you have missed payments, get caught up
as soon as possible. Handling your bills in a timely and consistent manner
will have significant influence on your credit score.
• Be aware that paying off a collection account will not remove it from your
credit report.
It can stay on your report for seven years.
• If you are having trouble making ends meet, contact your creditors or seek a
legitimate credit counselor.
This won't improve your credit score immediately, but if you can begin to manage
your credit and pay on time, your score will get better over time.
• Keep balances low on credit cards and other “revolving credit”.
High outstanding debt can affect a credit score.
• Pay off debt rather than moving it around.
The most effective way to improve your credit score in this area is by paying
down your revolving credit. In fact, owing the same amount but having fewer open
accounts may lower your score.
• Don't close unused credit cards as a short-term strategy to raise your score.
• Don't open a number of new credit cards that you don't need, just to increase
your available credit.
This approach could backfire and actually lower your credit score.
• If you have been managing credit for a short time, don't open a lot of new
accounts too rapidly.
New accounts will lower your average account age, which will have a larger
effect on your score if you don't have a lot of other credit information. Also,
rapid account buildup can look risky if you are a new credit user.
• Do your rate shopping for a given loan within a focused period of time.
Credit scores distinguish between a search for a single loan and a search for many
new credit lines, in part by the length of time over which inquiries occur.
• Re-establish your credit history if you have had problems.
Opening new accounts responsibly and paying them off on time will raise your
credit score in the long term.
• Note that it's OK to request and check your own credit report.
This won't affect your score, as long as you order your credit report directly
from the credit reporting agency or through an organization authorized to
provide credit reports to consumers.
• Apply for and open new credit accounts only as needed.
Don't open accounts just to have a better
credit mix - unmanaged properly, it could actually have an adverse affect on
your credit.
• Have credit cards - but manage them responsibly.
In general, having credit cards and installment loans (and paying timely
payments) will raise your credit score. Someone with no credit cards, for
example, tends to be higher risk than someone who has managed credit cards
responsibly.
• Note that closing a revolving account doesn't make it go away.
A closed revolving account will still show up on your credit report, and
will be factored in your score.
• Create a budget and track spending.
Create a budget so you know exactly where all of your money is going. Keep daily
records of everything you spend for a month and decide where you can cut.
• Balance your checkbook.
Often times, we rely too heavily on printed
bank statements and online banking to check our balances. It is suggested
that you manually keep track of your expenses using a hand written ledger
that you fill our by hand to more accurately monitor your finances.
• Open a savings account.
Start a savings account and commit to funding it regularly. One reason people
run into credit problems is that they don't have cash on hand for everyday
purchases.
• Be weary of “free trial offers”.
They are designed to suck you in and then stealthily set you up for automatic
debits or credit card charges.
• Trim the fat.
Look at your house, apartment, condo or town
home and see what items can be sold, what subscriptions can be cancelled and
so forth.
• Don't take on monthly credit payments unless you're certain you can meet them.
Consider the cost first. Do you really want to increase monthly debt load and
decrease your disposable income in the same transaction?
• Check all charges monthly against your credit card statement.
Keep copies of your sales slips and compare the charges when bills arrive. If
there's a mistake, call your issuer right away.
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