5 Ways To Improve Your Credit Score Article

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5 Ways to Improve Your Credit Score

Actively managing your credit accounts can gain you a better credit score and save you money. If your score is low you could end up paying more when you go to buy a home, a car, or when applying for new credit. It can also affect how much you can borrow and what interest rate you get.

Author: Mark Andrade

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Your credit score is a number representing the risk you pose to creditors if they lend to you. If your score is low because you are deemed a poor risk, you can end up paying more to buy a home, a car, or when applying for credit. It can also affect how much you can borrow and what interest rate you will receive. Improving your credit score can make you eligible for lower rates and save you money.

Follow these tips to improve your credit score:

Types of Credit Used - Only apply for and open accounts as necessary. Obtaining accounts just to achieve a credit mix probably won't help and could hurt your credit score. Too many inquiries can negatively affect your credit score. Responsibly managing whatever credit cards and installment loans you have will go a lot further towards improving your score.

New Credit -If you do require financing, focus your search for credit or a loan over a short period of time. The length of time when inquiries occur is taken into consideration when determining your FICO score. It's obvious if you are seeking many new credit lines, versus a single loan. If you have had problems however, it is prudent to work towards re-establishing your credit worthiness. If you open new accounts and manage them responsibly, you will raise your credit score over time. Checking your own credit score won't hurt you either as long as you request it directly from the credit bureau.

Payment History - This should be obvious, but paying your bills on time is the single most important factor affecting your credit score. Delinquent payments and collections can have a major negative impact on your FICO score. If you have missed payments, get current. The longer you pay your bills on time the better your credit score. Once an account is sent to collections it will stay on your credit report for seven years, even after you've paid it off! Contact your creditors and negotiate a different arrangement if you are having trouble paying your bills.

Duration of Credit History - Don' try to open a lot of new accounts to establish a credit history if you are just starting out. Rapid account build-up can look risky if you are a new credit user. Also, new accounts will lower your average account age, pulling down your score.

Outstanding Balances - High debt balances can hurt your credit score so keep the ratio between what you owe and your available balance as low as possible. Don't play shell games with your debt - it doesn't work. Instead work toward paying off any revolving debt which is the most effective way to improve your score. Don't close those accounts when they are paid off either. Closing accounts reduces your available credit line causing your credit score to go down.

The Bottom LIne

The three national credit reporting agencies use computerized calculations to determine your credit score based on how you manage these five factors. Your credit report must contain at least one account that has been open for at least six months, and at least one account that has been updated within the last six months. Now that you know the variables used to calculate your score, you can take steps to build the best credit score possible. Doing so can help you secure credit when you need it and save you money in the long run.

About Author

Visit our website all about American Payday Loans which gives practical advice to those experiencing short-term financial difficulties. It also offers information on navigating the Cash Advance Network, as well as tips on getting cheap Discount Advances, saving, budgeting, and other spending decisions.

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5 Ways to Improve Your Credit Score