Improve Your Credit Score

Tips to Improve Your Credit Score

It is important to understand first that their is no “QUICK” Fix to improving credit.  It does take time and diligence to improve your credit report.  Credit scores are very important if you ever plan to borrow money and can cost you thousands of dollars if one does not take care of their credit scores.  Nearly all finance companies will have well defined criteria to get the best deals and best interest rates.  A few points in your credit score can literally cost thousands of dollars in interest over the life of your loan.  If you follow these basic tips, you can improve your credit score.

Payment History

All bills must be paid on time.  Late payments will lower your credit score.  If you have delinquent balances, you must start making your payments and pay them on time.  Negotiating a lower payment with your creditor can often times help over a period of time.  The key is getting your payment to a manageable payment for you.  It is never a good idea to avoid the creditor.  Always keep in touch and let them know what you can and cannot do in an effort to negotiate more affordable terms for you.  If there is no meaningful dialog between you and the creditor, they will likely turn your account over to a collection agency.  If this happens, even if you pay off the debt, the collection will stay on your credit for seven years.

Manage the amount owed

Spreading balances owed around to different credit cards does not help your credit score and could hurt your credit score.  If you are having trouble making credit card payments, stop using the credit card.  Tear it up so you cannot use the card if you need to.  However, you do not want to close the account if you are trying to increase your credit score in the short term.  In fact, closing the account will likely hurt your credit score in the short term.  Do not open new credit card accounts to increase credit scores if you do not need the credit.  New accounts will lower your average account age.  The longer you have had an account the better it effects your credit score.

New Credit Suggestions

If you are shopping for a loan/credit, do your shopping over a short period of time.  Credit agencies do not penalize for pulling credit if it is obvious the consumer is credit shopping for a single loan.  However, if the consumer is shopping for several different credit lines, it will reduce your credit score each time your credit is pulled.  If you have had credit problems in the past, opening new credit lines and paying them off on time can increase your credit score in the long term but will not help you in the short term.  Remember that closing accounts will not remove the account from your credit.  Closed accounts could reduce your credit score over the short term.