Quantcast
Channel: My Family Finances
Viewing all articles
Browse latest Browse all 121

Raise Your Credit Score This Year

$
0
0

Credit score is not only important if you plan on getting a mortgage, loan, or lease right now, but at any point going forward, as in the eyes of lenders, basis for approval.  Credit scores can move up and down, based on your payment history, debt balance versus available credit, or amount of times either looking or taking out new credit.  A high score tells lenders that you are a responsible borrower; you pay your obligations on time, and do not overuse your credit.  A perfect credit score is 850, so in order to qualify for the lowest interest rates and pretty much guarantee approval; you need to strive for that 800-850 range, something that only 20% of consumers are above that mark.  It is definitely not impossible, and depending on your situation, could take years to fix, but it is worth it, as it will follow you the rest of your life.  If you have good credit already or needs improvement, you can still strive for perfection with a few tips.

If you have multiple credit cards, paying off the highest balance first will help raise your score.  It may seem more self-satisfying to pay off a couple of smaller balances and then move to the larger, but since your debt availability is a factor in your score, you will need to separate the space between your balance and available credit even more, even if it means paying the minimum on the other cards.  The rule of thumb is to try and keep credit balances at 10-30% of your available credit.  Asking for a higher credit limit can help your score, provided you do not see the extra credit available as an opportunity to go on a spending spree.

Be careful in how many times you are opening and closing accounts, as any new credit can lower scores.  If you like to juggle balances between two or three credit cards based on rewards offered, stay within those cards and do not close, only to have to reapply for credit again down the road.  Successfully keeping those accounts open for a long period of time, maintaining excellent payment history, while keeping balances paid off will continue to help build credit.  Sometimes lenders will initiate closing accounts that have not been used in a long time, so try making small purchases on there that can be paid off right away so there is activity on the card.


Viewing all articles
Browse latest Browse all 121

Trending Articles