5 Ways to Improve Your Credit Score
In the housing boom that occurred during the early years of the 21st century, easy loans for those with a poor credit history weren’t uncommon, these days they are quite rare. If you want to buy a home in today’s market, lenders will check your credit carefully and rarely will they approve a loan for someone who has a poor credit score. Your credit history not only affects your ability to get loans and credit cards, but the interest rates that you pay on them as well. A poor credit score can even cause a raise in your insurance premiums and in some cases it can tip the balance one way or another when applying for certain jobs.
Fortunately, a less than perfect credit score is repairable, but it will take some time, discipline, and diligence on your part. When it comes to your credit score, some things make more of a difference than others and there are some things that you can do to help raise your credit score so that you can get a loan for that house you’ve been dreaming of.
- Be Prompt When Paying Bills- Your history of bill payment makes up just around 35% of your total credit score. It includes payment of utility bills, auto loans, credit cards, and mortgages. Late payments made in recent history will impact your credit score the most so if you’ve had late payments in the past, be sure to avoid any new instances of this costly occurrence. One way to avoid this is to inquire with credit card companies and banks about email reminders about payment due dates.
- Review Your Credit Report on A Regular Basis- Credit companies make mistakes too. Since these can severely damage your credit score, be sure to quickly identify and correct any mistakes that have been made.
- Don’t Close Your Old Lines of Credit- It is commonly believed that closing old credit lines can improve your score. It may actually be of more benefit to keep these lines open because even if you have late payments in the past, a long credit history is to your benefit. This is particularly true if your have a large amount of available credit. Using older cards occasionally and paying them promptly can actually improve your score.
- Open New Lines of Credit With Care- Considering that the higher your credit line, the better, many people think that opening new lines of credit is beneficial to their score. The exact opposite is true because having several recently opened lines of credit may negatively affect your score. New credit lines don’t clean the slate and fixing problems with established credit lines is always preferable to opening new ones.
- Mix Your Credit Lines (carefully)- The mixture of different lines of credit can account for around 10% of your total credit score. For, a mixture of loans, credit cards, and other types of credit can impact your credit score positively if you use them wisely and don’t overextend yourself.
While these things can help you to repair a bad credit score, the easiest way to avoid these problems is to prevent them. Do whatever you can to ensure that bills are paid in a timely manner and it will go a long way toward improving and maintaining a good credit score. Having a payment that is a few days late may not seem important at the time, but when it’s time to go to the bank for that home loan, it can make all the difference in the world.