REVIEW THE FUNDAMENTALS OF YOUR CREDIT SCORE for the purpose of keeping it high, or helping to move it higher in the longer term. A higher credit score means lower interest payments for an auto loan, home loan, personal loans, new credit cards, etc. Maintaining a high credit score can save you thousands of dollars in interest payments.
Since your credit score is all about payment history, amount owed, length of credit history, etc., you want to keep that all in good standing.
5 Ways To Improve Your Credit Score:
1. Make timely payments: A 30-day late payment may reduce your credit score by 50 points. Your account may be sent to collection due to repeated late/missed payments.
Even if an account is in collection, pay it off and have the status updated on your credit report as “pay for delete” or “paid collection” after negotiating with the creditor.
For some people, setting up an auto bill payment through your bank account is a simple way to make timely payments.
2. Pay off debt instead of moving it around: It’s better to pay off debt rather than move it from account to another. This is because when you owe the same amount of debt but have fewer accounts open, it lowers your score further. Maintain low balances (around 10% of the available credit) on your credit cards and revolving accounts.
3. Establishing new credit: Try to shop for new credit and loans within a short period of time. Usually, for mortgage and auto loans, all credit inquiries made within a 30-day period are treated as one inquiry. So, the sooner you complete shopping for new credit, the better it is for your score.
4. Authorized users: When you add an authorized user to your credit card account, make sure that the user doesn’t overspend. Being the principal card holder, you’ll have to make the payments and in case you can’t afford it, your credit score would get the hit along with that of the authorized user.
5. Avoid store cards and small debts: Getting too many store cards isn’t a good move if you’re going for credit score repair. Such cards are open lines of credit and too many of them are considered as risky by credit bureaus, especially if these are not affiliated to a national creditor (such as MasterCard, VISA etc).