Credit scores are like report cards for grown-ups. It's a three digit score you get on a scale that ranges from 300 to 850. It indicates your creditworthiness to potential lenders, banks, landlords and insurance companies. Thus, the higher cost you have the better. You can get your credit report for free once a year from each of the three major reporting agencies namely Equifax, Experian, and TransUnion through annualcreditreport.com.
You can increase your credit score in as little as a month or two by following these tips:
•1. Always pay your bills on time. Always remember that delinquencies have the biggest negative effect on your credit score.
•2. Review your credit report from each of the three major reporting agencies closely. Immediately clear up any errors, such as incorrect credit limits, late payments, or collection items that aren't yours.
•3. Don't close unused credit cards accounts because canceling a card can actually lower your score.
•4. You need to pay down your credit card balances. Reducing your overall debt that's on your credit report is a very effective way to jack up your credit score.
•5. Avoid maximizing your credit cards. A good rule of thumb is to keep your balances below 30% of your credit limit, even if you pay them off in full each month.
•6. You need to get a secured credit card. When you have no credit history or a low credit score, a secured card can help you build credit if it reports information to the credit bureaus.
•7. Do your loan shopping quickly. Your credit score may gets pulled when you shop for a loan, so submit applications to potential lenders within a two-week period. Having lots of credit inquiries can decrease your score, but the system won't treat a cluster of credit inquires within a short period of time unfavorably.