subject: Four Quick Fixes To Improve Credit [print this page] Need to improve your credit? Bad credit can cost you thousands of extra dollars through higher interest rates on loans. If you anticipate borrowing money in the future then you should try to improve your credit rating. If you are perceived to be a good credit risk lenders will loan you money at lower interest rates thus saving you money. These savings will add up over your lifetime. Here are 4 tips to improving your credit rating.
1. Lower your credit cards balances
It is best to lower or eliminate your credit card debt. This will increase your credit score. Detail out all of your credit cards and their balances. Make a systematic plan to lower or pay off your balances. Stop using the card and spend only money that you have. If you have more than one credit card then pay off the one with the largest balance.
Rating agencies like to see a gap between our credit limit and how much credit you have used. Try to get your balance below 30% of the total credit limit. So if your limit is $10,000 try to get your balance to zero but if that is difficult keep it below $3,000.
2. Always Pay Debt Obligations On Time
Do not pay these or any other debt obligations late. Your credit score will improve if you pay these expenses on time. Failing to make these payments will hurt your credit and you may end up having collection agencies and/or attorneys chasing you down for the money. If you can't make a payment for a month let credit card company or other debt holder know why you can't make the payment that month.
3. Remove Late Payments
Get a free copy of your credit report and look who is reporting late payments. Call those companies and see if they would be willing to remove any or all late payments. If you are a good long term customer then they just might do it. It is worth the phone call. Removing late payments on your credit report will do great things for your score.
4. Don't Consolidate Your Credit Card Accounts
Applying for a new credit card account can hurt your scores. Oddly enough, moving balances from several cards to one card can hurt your score as well. It is better to have lower balances on several cards than one big balance on one card. Again, lenders look at the percentage of debt you are using on a particular loan. They don't like it if you are using a high percentage.
These are just a few steps to help you increase your score. Obviously, there are other things you can do. Poke around the internet and you will see plenty more about this subject. The best thing to do is simply to spend what you can afford, pay off your balances quickly, do not be late on payments, fix any errors on your credit report and don't stiff anyone. Do this long enough and you will have good credit.
