Category: <span>credit</span>

If you have ever tried to lose weight then probably you know how difficult it is to improve your credit score. It is not something you can do quickly. If you try to raise your credit score based on bad advice, you must be prepared for these quick-fix efforts to backfire. If you ask me to put all of the advice in one sentence, I would probably say “Manage your credit responsibly”. It is indeed a uphill task to improve your credit score once it is down. Still following the tips below is very crucial to get your bad credit back on track.

Build a sound credit history
Always pay your bills on time, every time
Nothing ruins your credit report like a delinquent payment or a collection. In 70% cased this is the major negative factor in people’s credit report.

Always take corrective action ASAP
If you missed one or two payments, take corrective action as soon as possible. Longer you delay your payment, worst will be your credit score.

Collection Is Like a Life Sentence to Your Score
If you pay off your bills after they go to collection. It might be too late. Even if you pay, this will stay on your credit report for next seven years.

When in need, Seek Help
If you can not keep up with your payments and it is really getting difficult to make ends meet, talk to your creditors Or better seek help from a good credit counselor. This might not increase your credit score in short term but if you are able to manage your credit and start making payments on time, you will see your score rising over time.

Credit score factorsHow Much Credit is Enough & When to Stop
If you are juggling, Its enough already
It is very important that you do not use more than 30% of the limit on your credit cards. If you have to get a credit card just for it low balance transfer rates and low fees, Its time to stop spending more than you can afford. Heavy outstanding debt can really wreck a havoc on your credit scores.

Don’t Revolve your debt, Pay it off
Revolving credit is like juggling while walking on tight rope. Its very risky and one false move can ruin the show. Think twice if you want to take such a risk. The single best thing you can do to improve your credit score is to start paying off the debt your have been revolving around. Its cheaper. If two people owe $1000 each, One to 5 different banks and second owes the same amount to only one bank. who’s score you think will be better? Second one of course! Having too many credit accounts can affect your score.

Keep it low, take it slow
Closing more than 2 un-used credit card accounts in a short period can hurt your credit score instead of increasing it. If you have to close some credit card accounts, do it gradually over a longer period of time. i.e. one every two month. Similarly opening too many credit card accounts at once will definitely increase your available credit but it is disaster for your credit score. Contrary to popular notions such approaches to improve your credit score can actually backfire.

Average account age is quite a heavy variable, when credit rating agencies weigh your credit score. each new account you open will decrease your average account age. It is advisable to keep your oldest credit account i.e. collage loan account or student credit card

Always Shop around for a better loan rate, but don’t take ages
Each hit by creditors for your credit report is logged. many hits in a short span reflect that you are shopping for a fair loan rate. It does not affect your credit score. But if the trend continues for long time. i.e. 50 hits over a period of 4 months, credit rating agencies take it as if you are searching for new credit lines and this can drag your score a few points downward.

Check Your Credit Score as often as you like
Contrary to popular belief, checking your own credit report directly from credit reporting agencies or authorizing your credit counselor to do so, does not affect your credit score. Credit rating system can distinguish between financial institutions and individuals. In fact its good idea to keep an eye on your credit score to make sure you are doing well financially.

Having Credit is Good, More is Better
As a general rule, as long as you don’t default, having more credit card and un-secured installment loans will raise your credit score considerably. All you have to do is to make timely payments. For financial institutions, a person with no credit is a bigger risk than a person who has been making his loan payments on time.

Only get a credit card if you really need it
Opening a credit card account and never using it will not affect your credit score. So opening a credit account jut to have a better mix of credit is waste of time, effort and money.

Closing an account does not make it vanish
Every Opening and Closing of credit account will show up on your credit report. It will stay there for at least seven years. I will be weighed in for calculating your final credit score. Keep this factor in mind when you apply for a new credit card or close an old one.…

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