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Improve Your Credit Score

A lot of people would love to go back to good old days when all that they knew about credit was that was how dad paid for breakfast on Sunday mornings. Now, unfortunately most people know more and wish they didn’t.

Credit reports and credit scores can take up valuable time checking and improving those rankings. Knowing how to improve a credit score is an important part of keeping a healthy credit history.

Perhaps the credit score isn’t all it should be. Here are a few tips and ideas that may be useful to the consumer trying to improve their score. Knowing is half the battle. The first thing to do is obtain a copy of the credit score.

While every consumer is entitled to a yearly free copy of their credit report, the FACT act doesn’t apply to credit scores. It will cost a small fee and it is important to be sure to get the credit score from one of the three national consumer reporting agencies or all three if the consumer wants to triple check their information.

One important tip to keep in mind is bill paying habits. This one is extremely important. Late or delinquent payments can severely damage a credit score.

If the consumer has found himself or herself in the difficult financial situation of not being able to pay all of their bills on time, the good news is re-establishing prompt payment will quickly build their score back up.

Credit cards, the bane of most peoples’ existence, are kind of a necessary evil. While having credit cards is a good idea from the credit point of view it is important to remember to maintain the lowest possible balance.

Credit cards that are used to their limit don’t reflect well on a credit score. While on the subject of credit cards, consumers would be well served to use them as they would alcohol, responsibly. Keeping payments current and the balances low will improve a credit score.

On the other side, a person who doesn’t have any credit cards is considered a high risk. It may come as a surprise but every time a consumer applies for a new credit card, it causes a small negative mark on their credit report, which in turn impacts the total credit score.

The consumer would do well to only apply for necessary credit cards. New credit accounts show up on the credit history as a lower account age and can lower the credit score by ten points.

Many people believe it is a good idea to close credit accounts once they are paid off. While this practice may make money management easier for the consumer, it actually reflects badly on the credit score.

The closed credit card will still be on the credit report and end up added into the credit score. Leaving the account open appears as available credit. Lenders and creditors like to see that.

Credit scores can impact interest rates on all types of loans. The lower the credit score, the higher offered interest rates would be. If purchasing a new car or home is on the horizon, then the informed consumer will cut back on credit card purchases and make a valiant effort to make all payments on time.

It could make a difference in not only how much interest is charged but in if the loan is granted or not.  There are ways for the consumer to improve their credit scores. It just takes time and patience. A healthy dose of will power never hurt either.