Ways to Improve Your Credit Score

 

Your credit history is highlighted by a three-digit number known as the credit score. Your credit score is a number generated by a formula, developed by Fair Isaac Corp., that gives prospective lenders a quick and precise forecast of the risk involved in giving you a loan. An average credit score is around 750, and a score of 700 or above is actually very healthy. But a score below 600 would mean higher interest rates and possibilities of denied mortgages or other important loans, as well as higher insurance rates. So to improve your credit score for you to enjoy most of life's pleasures, here are some helpful hints:

 

1. Pay your bills on time.

 

There is just no better way to damage your credit score than having delinquent payments. If you've missed something, try to patch things up. Remember, prompt-payment habits result in higher credit score.  It might help, if you overlook paying a bill on time by accident, to call the creditor and explain the situation.  They might not mark the report as delinquent, and they might even forgive the late payment penalty.

 

2. Never push your credit limit to the max.

 

Do not let your balance go over 70% of your credit limit. The actual amount you have on your balance relative to your credit limit can affect your credit score.   Using more like 30% of your credit limits is much healthier.

 

3. Never make it a habit of applying for credit cards frequently.

 

Every credit card applications you make, whether denied or approved, can directly affect your score. Scoring systems consider your inquiries stated on your credit report. More denied applications mean lower scores. It would be better to apply for another credit card only when needed.  So don’t apply for a card just because it comes with your team logo or gives you a prize.

 

4. Never close an account.

 

Your accounts, whether open or closed, stay on your credit report for seven years. So, don't close unused cards just to improve your credit score. Closing an account is almost as bad as not paying debts on time. Having the same amount of debts but with fewer open accounts can directly lower your credit score, because then your available balance relative to your available credit will be a higher percentage.

 

5. Obtain a variety of well-managed credit accounts.

 

Having at least 3 credit accounts open and paid on time, with moderate limits and balances, can actually help improve your credit score. This shows how well you can manage your debt.

 

6. Double-check your report for errors.