Because of the way credit scores are calculated, some
actions you take will affect your credit score better than others. In general, paying your bills on time and
meeting your financial responsibilities will boost your score the most. Owing a reasonable amount of money and being
able to repay it will show lenders that you take your finances seriously and
pose little threat of lost money. There
are a few tips that, more than any other, will boost your credit score the
most:
One of the best ways to improve your credit score is simply
to pay your bills on time. This is
absurdly simple but it works very well, because nothing shows lenders that you
take debts seriously as much as a history of paying promptly. Every lender wants to be paid in full and on
time.
If you pay all your bills on time then the odds are good
that you will make the payments on a new debt on time, too, and that is
certainly something every lender wants to see. Experts think that up to 35% of your
credit score is based on your paying of bills on time, so this simple step is
one of the easiest ways to boost your credit score.
Paying your bills on time also ensures that you don’t get
hit with late fees and other financial penalties that make paying your bills
off harder. Paying your bills in a timely way makes it easier to keep making
payments on time.
Of course, if you have had problems making your payments on
time in the past, your current credit score will reflect this. It will take a number of months of repaying
your bills on time to improve your credit score again, but the effort will be
well worth it when your credit risk rating rebounds!
If you have many lines of credit or several huge debts, you
make a worse credit risk because you are close to “overextending your
credit.” This simply means that you may
be taking on more credit than you can comfortably pay off. Even if you are making payments regularly
now on existing bills, lenders know that you will have a harder time paying off
your bills if your debt load grows too much.
The higher your debts the greater your monthly debt payments
and so the higher the risk that you will eventually be able to repay your
debts. Plus, statistical studies have
shown that those with high debt loads have the hardest time financially when
faced with a crisis such as a divorce, unemployment, or sudden illness.
Lenders (and credit bureaus who calculate your credit score)
know that the more debt you have the greater problems you will have in case you
do run into a life crisis.
In order to have a great credit score, avoid taking out
excessive credit. You should stick to
one or two credit cards and one or two other major debts (car loan, mortgage)
in order to have the best credit rating.
Do not apply for every new credit line or credit card “just in
case.” Borrow only when you need it and
make sure to make payments on your debts on time.
You should also know that taking out lots of new credit
accounts in a relatively short period of time will cause your credit score to
nosedive because it will look as though you are being financially
irresponsible.
Pay Down Your Debts
If you have a lot of debt, your credit score will
suffer. Paying down your debts to a
minimum will help elevate your credit score. For example, if you have a $1000 limit on your credit card and you
regularly carry a balance of $900, you will be a less attractive credit risk to
lenders than someone who has the same credit card but carries a smaller balance
of $100 or so. If you are serious about
improving your credit score, then start with the largest debt you have and
start paying it down so that you are using a less large percentage of your
credit total.
In general, try to make sure that you use no more than 50%
of your credit. That means that if your
credit card has a limit of $5000, make sure that you pay it down to at least
$2500 and work at carrying no larger balance.
If possible, reduce the debt even more.
If you can pay off your credit card in full each month, that is even
better. What counts here is what percentage of your total credit limit you are
using - the lower the better.
Have A Range Of Credit Types.
The types of credit you have are a factor in calculating
your credit score. In general, lenders
like to see that you are able to handle a range of credit types well. Having some form of personal credit - such
as credit cards - and some larger types of credit - such as a mortgage or auto
loan - and paying them off regularly is better than having only one type of
credit.
Services That Boost Credit Scores
Prepaid Credit Cards - Walmart offers a prepaid credit card that allows you to build your credit score and earn up to 3% back on all of your walmart purchases. The reloadable Walmart MoneyCard MasterCard is issued by Green Dot Bank. The prepaid credit card service offers the convenience of a reloadable, prepaid Visa Card or prepaid MasterCard Card. It is easy to get; you do not even need a bank account. No purchase fee when you order your card online, and never any overdraft fees. Now you can pay your bills online and use your credit card anywhere MasterCard or VISA is accepted.
FLEXSHOPPER - Build and improve your credit score when you lease to own. Shop over over 85,000 brand-name products. Qualify for up to $2,500 instant spending limit! Approval in minutes. Application requirements are quite simple. you must earn at least $1,000 per month, a bank account for at least 90 days and No more than 1 NSF in the last 30 days. Bad is credit ok. Approval is instant.
Services That Boost Credit Scores
Prepaid Credit Cards - Walmart offers a prepaid credit card that allows you to build your credit score and earn up to 3% back on all of your walmart purchases. The reloadable Walmart MoneyCard MasterCard is issued by Green Dot Bank. The prepaid credit card service offers the convenience of a reloadable, prepaid Visa Card or prepaid MasterCard Card. It is easy to get; you do not even need a bank account. No purchase fee when you order your card online, and never any overdraft fees. Now you can pay your bills online and use your credit card anywhere MasterCard or VISA is accepted.
FLEXSHOPPER - Build and improve your credit score when you lease to own. Shop over over 85,000 brand-name products. Qualify for up to $2,500 instant spending limit! Approval in minutes. Application requirements are quite simple. you must earn at least $1,000 per month, a bank account for at least 90 days and No more than 1 NSF in the last 30 days. Bad is credit ok. Approval is instant.