Seven Tips for Improving Your Credit Score:
Knowing how credit scores are calculated is only part of having a good credit score. Taking action to ensure your credit score remains as high as possible is more important. Start making changes now to ensure your credit score is as high as it can be. The seven credit score management tips listed below are simple.
- Pay all of your bills on time. This is the single most important factor in having a high credit score. Delinquent payments and collections have a major negative impact on a score. However, remember that paying your bills on time only accounts for 35% of your overall credit score.
- Keep your balances low on unsecured revolving debt and other open lines of credit. This includes accounts like credit cards, department store credit cards, HELOC’s (Home Equity Lines of Credit), PLOC’s (Personal Lines of Credit), BLOC (Business Lines of Credit).
- High outstanding balances can effect a score. As a general rule, never charge more than 30% of your total available credit on any revolving or open-ended credit line. For example, if you have a credit card with a $6,000.00 limit, never charge more than 30%, or $1,800.00 on that card. According to the award winning website MyFico,
(creators of the FICO score – the only real credit score), those in the top 5% of all credit scores keep their balances at less than 7% of their available credit limit.
- The amount of your unused credit is an important factor in calculating your score. Apply only for credit that you need and never close an open credit account unless it is costing you to keep it open.
- The older your credit is, and the more positive your older credit accounts are, the better impact it has on your score. Therefore, keep your oldest lines of credit open.
- Make multiple payments on your open-end or revolving lines of credit monthly. Creditors like to see payment frequency and this calculates positively in your credit score. All of your payments combined throughout the month should equal at least the minimum of the “minimum amount due”.
- Make sure the information in your credit report is correct. If it’s not, dispute it with the credit agencies and/or with the creditor directly.
