When we graduate from school we think we have left the world of grades behind. Oh, how wrong we were. It is from around that time that we begin realize that in order qualify for good interest rates on mortgages, auto loans, and credit cards, we have to get a good grade on our credit reports, too. Here are 9 simple ways to improve your credit, or FICO, score: 1. Pay down as much debt as possible: Almost one third of your credit score is based upon a ratio that takes into account the amount you owe and divides it by your total credit line. The more debt you pay down, the lower this number goes, which bodes well for your credit score. 2. Steadily apply for more credit: Yes, having more credit can sometimes actually help your credit score. For the same reason that it is good to reduce your debt as explained above, it can be beneficial for your score to have additional credit extended to you. Just be careful not to open too many new accounts at once, as this could actually hurt your score. 3. Make your payments on time: More than a third of your score reflects how timely you are with your payments. If you want to improve your score, do not miss any payments. If you do plan to miss a payment, call your creditor and ask them for an extension. They might be willing to work with you. 4. Erase errors on your reports: This is an easy fix and one you owe it to yourself to do. Find any errors on your credit reports and fix them immediately by calling the institutions responsible for reporting the errors. If identity theft has occurred, contact all three of the Big Three credit agencies and get the problem fixed. 5. Repay old, outstanding debts: If your report shows an overdue payment from a year or more ago, you can still contact the company who billed you and either dispute it or just pay it. They are then required to report to the agencies that your account is up to date. 6. Use your cards each month: If you have multiple credit cards, use a few of them each month to make small purchases. But, be sure to pay down all that you charged before the end of the billing cycle. This will have a positive impact on your score because it shows you can handle making payments. 7. Transfer debt to lower interest cards: You can actually pay down your debt much faster if you transfer debt from higher interest cards to lower interest credit cards. Lower interest cards means lower payments and therefore more money left over each month to pay down your debt, improving your score. 8. Diversify the types of credit you have: Get a couple of store cards, a couple of credit cards, and an auto loan (if you qualify). Having a variety of credit instruments makes your financial profile look healthy. 9. For high balance cards, pay 10% more than monthly minimum: For that stubborn debt that you have not yet been able to pay down, do this: make the minimum payment each month but add 10%. So, if your minimum payment is $180, pay (180 18=) $198. This will make you look like you are in control of your debt, not the other way around. Get started on these 9 simple ways to improve your credit scores and get on the road to financial health.
Related Articles:
| 
