What Can I Do To Increase My Credit Score?

After losing what had previously been a good or excellent credit score, it can be a long and hard process to recover it. Make no mistake, your credit score is very important. Lenders have rules that are practically commandments as to whom they should lend. For instance, if a lender has a rule that states that their best interest rates are offered only to borrowers with a credit score of 700 or higher, and your score is only 698, even a difference of two points can cost you thousands of dollars. This also highlights the importance of doing your homework about mortgages before taking on.

If you want to improve your credit score, there are three rules of thumb: pay your bills on time, keep the account balances of your credit cards low, and seek new lines of credit only when you need them. This is the basic three-step plan towards maintaining good credit. To get an accurate look at your credit score, request a credit report and take a look at the specific entries. Look for errors, such as accounts that are not yours, debts that have been completely paid off even though they are listed as being outstanding, and old debts that have either expired or passed their respective statute of limitations.

Aside from taking care of errors, the quickest way to raise your credit score is to pay down account balances over a period of two months. This is a sure-fire way to raise your score by one or two points, which is great if you are a borrower in a similar situation to the one outlined above. The next step is to start paying your bills on time, even if you’ve had some late payments in the past. Do not pay attention to all the talk about “grace periods” the best way to maintain a good score is to pay all of your debts before they are due.

Avoid closing any accounts in order to improve your score. Closing an early account and keeping ones opened recently can lower your score because it makes you look like a newer borrower. If you do close accounts, leave the oldest one open. This way you can cut down on credit accounts while maintaining your high score. Transfer balances from one card that is near its maximum to another card to even out the balances on all the cards. This will avoid the appearance that you are trying to max them out, which will prevent your score from being lowered.

Not sure where you stand?  Visit annualcreditreport.com for a free copy of your credit report and myFico.com for your actual Fico Score.