IMPROVING YOUR CREDIT SCORE


If youre planning on taking a loan or applying for other forms of credit, it might be prudent if you check out your credit score first. A credit score is a three digit grade given to you by a credit bureau, ranging from 300 to 850, and which lenders and creditors refer to when evaluating whether to approve your application or not.

Now, determining this is not so hard to do. What you do is ask for your credit report from one of the three national credit bureaus (Experian, Equifax and Trans Union) and check for errors and inconsistencies. Best if you do this ahead of your potential creditors to make sure the figures are correct. Ideally, youll have to be at least 700 to gain the reputation of a credible and responsible borrower. Naturally, the application process gets more difficult as the score goes lower.

Credit card companies and lenders usually base their decisions on the following:

- Have you been paying bills on time?
- How far back does your credit history go?
- Do you have outstanding debts?
- Do you have multiple, existing credit accounts?
- Did you apply for credit recently?
- Personal info occupation, years with current employer, residence address, etc.

With these in mind, we now answer the question: How do I improve my credit score?

- Pay all your bills on time, particularly during the several months leading up to your application. Payment history comprises 35% of your credit score, so this is crucial. A bill missed by just a month can set your score back by 50 to 100 points. In order to avoid missing payments, it is suggested that you place bills on automatic debit from your bank account.

- The less you charge on your credit card, the higher your score is likely to be. Some lenders appreciate gaps in between the time you charged and the time you paid off all your balances. Use cash more often.


- Dont close your old account. Credit history goes as far back as seven to ten years, and closing down your older transactions only shortens the history recorded on your credit report. But, if you already have a high credit score and your rarely use your credit card, then closing them wouldnt really be a problem.

- Several scoring models consider the number of inquiries made on your credit report. If you have too many credit accounts and have a number of existing loan obligations, your credit score could go down.

So, in sum, getting a good credit score means being responsible with your finances. If the lender sees you know how to handle money, then you wont have any trouble passing a credit application.

Contact the three credit bureaus via these numbers:

Experian: (888) 397-3742
Equifax: (800) 685-1111
Trans Union: (800) 916-8800