Debt and credit

How to Improve Your Credit Score

Credit-scoreYour credit score is your life. Or at least it may seem that way. Indeed, your three-digit credit score may open or shut doors, including keeping you from obtaining new credit or finding credit at favorable rates. A score of at least 700 shows good credit management. Here's how to improve your credit score.

Pay your accounts due on time. When a bill or other expense is due, endeavor to pay it on time. Not only that, you should have it scheduled to be paid before the due date. Late payments can and will harm your credit score. If possible, schedule your payments automatically — relying on automatic debits from your checking account to pay what you owe before the due date.

Tackle your credit card balances. High credit card balances will affect your credit score. It is better to pay off balances each month, but if you cannot, at least make more than the lowest payment each month. Credit card balances should not approach anywhere near your credit line limit. If it does, then you will see your score lowered accordingly.

Keep those old accounts open. You may believe that if you aren't using a credit account that it is better to simply close it. Unfortunately, in closing an account, your credit score will take a hit. Better to keep that account open and unused than to close it and watch your score drop explains Credit Sesame.

Avoid opening new accounts. Only have the credit on hand that you absolutely need. Whenever you open new accounts, you effectively are lowering your score. You may enjoy a short term benefit (new credit) only to have a long term hit (lower credit score) accompany your decision.

Monitor your credit reports and score. The only way you know what your credit score is comes through obtaining that score. Indeed, that three-digit score is of critical importance — the higher your score, the easier it is for you to get new credit. Furthermore, a higher score will provide better terms for you, especially a lower interest rate. Review your credit report copies to ensure that the information collected about you is correct. You can obtain all three copies for free once annually through AnnualCreditReport.com.

Attack your big debt first. If you are in debt and want to reduce your overhead, then begin to pay off your high interest debt first. Keep paying down your other debt, but make larger monthly payments to tackle your high interest debt above all. When that debt is paid off, then move on to the next debt. This is known as the debt snowball method or a faster way to pay down what you owe.

Improve Your Credit

Improving your credit is not a quick, easy and painless procedure. It is a journey, one measured more by years than by weeks and months. Still, if you pour yourself into the process, you can see some improvements quickly. After about a year of work, your credit score should noticeably improve.

Do you have any questions? Please ask.