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Six Tips To Improving Your Credit Score

Your credit score says a lot about you. It tells potential lenders how you pay your bills. It lets prospective employers know how responsible you are. It even tells an insurance company how likely you might be to commit insurance fraud. With all of this riding on your credit score, you need it to be as high as possible. The good news is that there are several simple steps you can take to maximize your credit score.

1.      Pay your bills on time. This is the single most important step you can take to improve your credit score. 60% of your score is based on how you pay your obligations. Even one late payment can negatively impact your score. With that being said, if you have been late, strive to make your payments on time each month in order to minimize the impact late payments have. The older these late payments are, the less impact they have.
2.      Reduce credit inquiries. Hard inquiries occur when you apply for credit. While it is a good idea to shop around for the best deal, understand that each time you apply for credit or for a job or product that requires a credit check your score will go down.
3.      Keep your balances low. Your credit score is also affected by how well you use credit. If you have several accounts that are at or over the limit, your score will be much lower than someone that carries a balance of ½ their assigned limits or less.
4.      Keep accounts open. Closing credit accounts will temporarily lower your credit score because it will increase your debt to available credit ratio. The good news is that this effect is temporary a long as you pay the balances down on your other cards.
5.      Pay your other accounts. Not only must you pay your regularly reported accounts on time every month, but also accounts that are not regularly reported to the credit bureaus. The reason is simple. If you do not pay these accounts, they will most likely be turned over to a collection agency, which does report to your credit report.
6.      Do not open unnecessary accounts. While it may seem like a good idea to open extraneous accounts in order to improve your debt to available credit ratios, there is a thing as too much credit. This can work against you as well. Keep a few accounts active and in good standing on your report.

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