Wednesday, July 11, 2012, AM | Leave Comment
You can improve your credit score by doing something but at the same time you can improve it by sitting tight and not doing anything.
We all know a good credit score will not only get you a loan but with lower interest as well.
If you are in the market for a loan whether for home mortgage or personal loan, banks and other lending institutions look at your credit score to determine the risk attached with your financial existence.
The Dos of improving your credit score
I did a post on how to improve your credit score a while back. The current post is a reminder for you to start working on it if you have not already done so.
But first off, you ought to know your credit score that are kept as record by three companies: Equifax, Experian, and TransUnion. By the way, these credit bureaus are not branches of government.
Do get your annual credit report…
By law, each of the three will provide you your credit record once a year free of charge. You can schedule reports so you get three each year every four months, all for free.
Do correct discrepancies…
Check all three reports to make sure personal information such as your Social Security number is correct. See if every line of credit on the report is actually yours and payment data is accurate. If you find discrepancies, contact the agency to have it corrected.
Do pay your bills promptly…
Make sure all of your loans, credit card and other bill payments are on time. For that, setting up automatic payments for at least the minimum will help and ensure that you don’t miss payments.
Do watch your utilization ratio…
Everyone has a maximum credit limit on their cards. When you charge on your card, the available credit remaining obviously gets lowered by the amount of your purchase. It’s called the utilization ratio. The lower the ratio (the more credit available of the maximum), the better your credit score.
Paying off a substantial portion of your credit card debt will reduce your ratio enough to raise your score.
The Don’ts of improving your credit score
As there are the Do’s of improving your credit score, there are the Don’ts as well.
Don’t get many credit cards…
If you have two credit cards, that’s more than enough. Don’t apply for additional credit if you are planning to buy a house in the next few months and years.
Don’t close accounts…
Don’t close old accounts even if you haven’t used a credit card in some time. Shutting down the account can hurt your score and can lower it by as much as 75 points.
In a Nutshell
Follow the above points and slowly but surely your credit score will improve over time.