Most people are concerned about their credit score. Some of these people have credit scores that need to be improved while others have used good practices and have great credit scores. Having a great credit score does not occur overnight, it takes long term financial practices to get yourself to that point. Having a high credit score can save you a lot of money over the years. It is especially important when you want to purchase a large ticket item that must be financed. Following is a list of factors that play into credit score and how to improve your score:
On-time payments – If you are desiring to get your credit score to 800 or above pay your bills on time every time. This is a must because this is the greatest factor in terminating your score. One helpful aid in making this happen is to setup automatic pay or have reminders to yourself to prevent late payments.
Amounts owed – Having debt and proper management of debt is important and will help improve credit score. Important to keep revolving debt below 30% of available credit limit. If you desire to have a higher debt limit, ask for a higher debt limit and if granted that will change your ratio.
Credit history – Long history of good credit standing will increase your credit score. This gives lenders a better understanding how well you will repay new loans. Also keeping accounts open in good standing and limiting credit card inquires will work to your advantage.
Account types and credit activity – Advisable to have a diversified set of accounts, but limit the number of accounts. The ideal mix of accounts might be auto loans, student loans, mortgage, and revolving credit cards. This will help you improve your score. Do not take out new loans to create a mix, only take out loan if needed.
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