Improving Your Credit Score – Tips to Help You Raise Your Credit Score
There are several reasons why your credit score is important. Credit scores are used by financial institutions to determine your risk to them. Lowering your risk is better for you than getting approved for the best possible deal.
A credit score
is based on your payment history, your total amount of available credit, your credit utilization score, and the timeliness of your bill payments. Credit card companies, car dealers, mortgage companies, and employment agencies are just three categories of lenders who will examine your credit history before determining how much they will loan you and at which interest rate. Employers, landlords, and insurance companies will also look at how financially responsible you appear to be before issuing a policy, renting an apartment, or offering an automobile insurance policy. Banks and other financial institutions may use your score to determine your capacity to repay a loan. If you have good credit but are unable to make your monthly payments, you could find yourself with bad credit and no option to obtain a car or apartment. Even if you have a low credit score, you can improve it by following the tips listed below.
Make all of your payments on time.
This will raise your credit score as it shows that you will not go into debt. Also, if you do not make purchases using your card, the card companies will not report negatively on your account and you will not have a total amount due on your credit limit. Paying off the entire balance in time will show lenders that you are a responsible borrower who does not spend money that is not available to spend.
Keep your existing credit accounts open.
This is another factor that lenders review when determining your credit score. Open accounts will demonstrate your ability to manage your financial finances. If you have a good history of maintaining accounts, this will increase your creditworthiness.
Avoid opening new accounts.
Many lenders will only issue credit cards or loans to people with good credit scores. They do not want to take a chance on a bad credit score person, because they may be missing on a large potential profit. Opening new accounts can seriously damage your credit score, even if you do not go over the limit on any of the new accounts.
Maintain your existing credit score
by avoiding loan and credit card balances that exceed your credit score. These types of expenditures will significantly decrease your credit score. Paying off credit cards and loans in full will help you maintain your score. Paying off your current debts in good time may be more beneficial to your credit score than paying off the balances on new accounts.