Tips for improving your credit score...June HR article

How to Score Good Credit

If you’ve been denied a loan, mortgage, lease or credit card, chances are it has something to do with your credit score. You can read more about credit reports and consumer protection here. In the meantime, here are six ideas for boosting your score, raising your limits and improving your rep one credit card statement at a time. 

1. Pay bills on time and reduce the amount of debt you have. This includes credit cards and every kind of installment debt you currently owe.

2. Pay off credit card bills entirely each and every month. If that’s not doable, do be sure to pay them by the due date (preferably beyond the minimum) and come up with a plan to pay them off fully…soon. 

3. Set up text and email reminders. Lenders and creditors are pretty modern these days. Most will sign you up for this option before you take that first swipe.

4. Automate your bill payments. By enabling automatic credit card payments you don’t miss any due dates.

5. Stagger your debt by interest rate. Pay off cards with higher interest rates first. This will improve your credit score and cut down on fees and interest. At the same time, consider paying down credit that is at or close to your limit.  The closer to the limit you are, the more your credit is impacted and your score lowered.

6.  Consider your credit cards carefully. Contrary to what many believe, closing unused accounts does not have a big impact on raising your credit card score. Opening a bunch of new credit cards in the same year and closing others can actually have a negative impact on your credit score.  Instead, try this: rely on two to three credit cards that you use prudently one month and pay off the next. Building credit wisely over time helps your credit score.

7. Consider a Small Installment Loan.  If you are in need of credit, and are hesitant about entering the world of credit cards, a small installment loan is a good, credit building option. An installment loan is a loan that is repaid over time with a set number of scheduled payments, typically at least two. Small installment loans demonstrate being credit worthy through a stream of payments on a debt over time, which builds your credit score.

And remember…it’s more than a number!

The three major credit-reporting bureaus calculate your score by taking several factors into account, including:

·        The types of accounts you have open

·        How long you’ve had them open

·        How high the balance is currently or has gone in the past

·        Your payment history

·        The current status of the account, your ‘payment performance’ over the past two years, charge-offs and repossessions

To boost your score, follow the seven tips outlined above, check your credit reports regularly and protect yourself if you feel you’ve been the victim of fraud. After all, it’s your credit on the line.  

Learn more at www.feedthepig.org