Nine Things You Can Do To
Improve Your Credit Score
A credit score is simply a measure of your credit worthiness, or your ability to take on or pay off credit (debt). The Fair Isaac Corporation (FICO) has a proprietary formula that determines a numeric value based on your credit worthiness.
Lenders or issuers of creditors routinely refer to a FICO score to determine if you are a good or poor risk for them. Recently, the three main credit bureaus are implementing their own credit score, though time will tell which if they will prevail over the FICO score.
The majority of your FICO score is determined by your payment history (35%), and your debt to income ratio (30%). Other factors are the length of your credit history (15%), how much new credit you have added (10%), and what type of credit you use (10%).
It is in your best interest to make sure you have a high credit score and here are a nine things simple things you can do to increase your score.
1. Review Your Credit Reports Annually
Run all three of your credit reports from the top reporting bureaus every
year. They are Equifax, TransUnion, and Experian. Make sure there are
no mistakes on there that could hurt you. If you see accounts you did
not open, report it immediately to the creditor, as well as the three
credit bureaus.
2. Review Each Statement Monthly For Unknown
Charges
As each credit card statement comes in, review it for charges you made
or did not make. Report any unknown charges immediately to start the dispute
process. Don't wait six months to report an unknown charge.
3. Never Carry High Balances
If you carry balances over 75% of the credit limit, you are becoming a
risk to your creditors. Keep your balances under 75% of the credit limit
will keep you in good graces with your creditors.
4. Never Miss A Payment - Always Pay Your
Bills In Advance
One late bill could trigger a very ugly clause called "Universal Default." This
allows the creditors to raise your interest to Mafia level rates if you
are ever late on a bill, theirs or even a gas bill. When you start missing
payments it shows you don't have the money to pay off your debt, which
allows them to extract as much cash as possible from you before you go
broke.
5. Don't Close Accounts You Paid Off
Closing an account lowers your total available credit. This will in turn
raise your debt to income ratio, which will increase interest rates.
Pay off your cards and keep them open, never close them.
6. Don't Accept Every Offer They Make You
The card companies send out billions of advertisements every year to obtain
new credit. They take them by the pallet to the post office. Opening
many new accounts hurts your FICO score.
7. Always Shred Anything With Your Name On
It
One way identity theft happens is from those innocent requests to apply
for new credit. Shred them, as they have your name on them and you should
never throw them out. Office Depot has cheap cross cut shredders. Someone
can go through your trash, apply for the card, and give a new address.
Now they start charging and they have a few weeks before you even find
out.
8. Don't Pay Minimum Payments
Paying minimum payments could delay paying off your debt for up to eighty
years and add two to three times the debt in interest. How many times
do you have to pay off your debt? Ideally, pay 10% of the balance to
pay it off quickly.
9. Don't Pay Off Every Credit Card
When you have zero balances on your card, you are a deadbeat in the creditors
eyes. Hard to believe, yet these are the people that call debt, credit.
If you keep small balances, and use them regularly, then pay them off
over time; you can raise your credit score.
That's our report on 9 Things You Can Do To Improve Your Credit Score. Implement every one of these suggestions to start raising your credit score. If you have bad credit, you need to get rid of it. Find out how over 300,000 people cleaned up their credit using the link below.
Christopher Winkler
Author
Debt Chemotherapy
cwinkler@debtchemotherapy.com
http://DebtChemotherapy.com/CreditRepair
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