How to Increast Your Credit Score

Last Revised on August 15, 2011

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So you have been trying to get loans and so far not been able to get a good interest rates on them. It is possible that lenders have been looking at your low credit score and thus giving you high interest loans. Here are some of the things to do that can help give your credit score a boost:

Keep your accounts going and active. Having a higher proportion of closed accounts can hurt your credit score. In the past, the biggest risk from letting accounts be inactive is that your lenders might close them, thus dinging your scores. Now simply having too many inactive accounts could count against you in some circumstances. Once again, the new scoring formula is looking for evidence you can responsibly manage credit. Consider keeping your oldest and highest-limit cards active by charging something to them each month.

Read your credit reports. Your credit score is derived entirely from the information on your credit reports at the three bureaus, and a single serious error can cost you big time. And very few people seem to know that everybody is entitled to a free annual look at your reports. Dispute any accounts that aren’t yours or any negative entries that are more than seven years old (or 10 years in case of bankruptcy).

Actively using the credit accounts you have may be more important but applying for new credit accounts may hurt less. This is because these activities show that you are a risky borrower since as a consumer you are spending persistently.

Having high balances on your credit cards could hurt more. And having both revolving and installment accounts on your report could help you more, as the new formula is more sensitive to your ability to handle different types of credit.

Don’t Pay late. Late payments can bring a disaster to your credit score. Even a single payment that is late can knock your score from prime to near subprime territory overnight. Make sure all your bills are paid on time. If possible, people should see if they want to set up an automatic or recurring payments from their credit or bank accounts.

Don’t close accounts. The creator of FICO score, Fair Isaac has said it clearly that closing accounts can never help a classic FICO score and may hurt or make it worse. With FICO 08, that’s even truer. The new scoring formula wants to see evidence that you are actively and responsibly using credit. So you get more points for having open accounts in good standing.

Dispute errors with creditors. After reading your credit report, you find out that there are substantial number of errors you can always talk with the creditors to fix them. Most common errors include accounts that are listed as unpaid and items older than sever years period included in the bankruptcy.

These tips and techniques may not increase your credit score by 100 points, but it will surely help raise it to some level.

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One Response to “How to Increast Your Credit Score”

  1. Credit Management Guide Says:
    August 15th, 2011 at 8:05 am

    I can only offer one tip that may help raise your credit score if you follow it diligently. The trick is that borrow money but to an extent where you can make payments back on timely manner. Keep balances to the minimum but don’t close the accounts nor open new ones. Using this technique wisely will create a good credit history for you and help raise your score easily.

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