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Improving Your Credit Score

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Improving Your Credit Score

A consumers credit score will directly influence their opportunities to be approved for loans or establish revolving credit accounts. It is also important to consider that credit scores have a profound impact on interest rates in terms of what a bank or lender might offer you the consumer. A consumer having a low credit score could and will probably be denied of credit or be considered high risk, meaning if you are approved for credit you will then experience considerably higher interest rates than a person having a outstanding credit score. During the term of any loan, the amounting fees from interest can cost many thousands of dollars.

 A person who currently has good or outstanding credit score must do their best to properly maintain that score. It is especially important for a person who has poor or fair credit score resulting from past misuse of credit to attempt to correct their poor credit score as soon as possible. There are many ways in which a person can rebuild their credit score, potentially letting them be able to get to a better interest rate or revolving credit and loans.

Here are a few ways on what you can do in order to insure you have a better credit score.

Paying Bills on Time

Paying your bills on time most certainly seems like common sense for a consumer, but it is often overlooked. Undoubtedly, late payments are commonly the source of any serious drops in reported credit scores. Late payments or missed payments are the most frequently occurring negative information on credit reports. By only making the minimum payment before the due date every month will help to rebuild and maintain your credit score.

Any kind of a late payment can be incredibly detrimental to ones credit score. Even Simply skipping or accidentally missing a payment such as your mortgage payment can do extensive damage to a consumers credit score, taking up to seven years for the impact of that one late payment to lessen.

Even more damaging to a consumer's credit score than late payments and skipping payments, would be having that a account sent to a collections agency. If an account has been sent to a collections agency, the creditor has gone without receiving  minimum monthly payments many consecutive months. Once a account has been sent to a collection agency, damage to the consumers credit report is unavoidable, regardless if you pay it off completely once it has been sent to collections. So don't be fooled when the collection agency's tell you that if you pay it off completely now it wont affect your credit score because this is a lie. Once a account is sent to a collections account the negative mark will stay on the consumers credit score for at least seven years.


Avoid Excessive Inquiries to the Credit Report

Something to keep in mind is inquires made onto a consumers credit report. So when ever you fill out a application for any type of credit or loan these inquires will be recorded to your credit report, it will typically stay on the report for no less than two calendar years. Most often those inquires being a year old or less, affect the credit score slightly in a negative way. Too many inquires over a very limited time span will significantly impact one's credit score. When these inquires are made, they are typically through Transunion, Equifax and Experian credit reporting agencies.

In the even of seeking out the best loans or mortgages, it is inevitable to have multiple inquires on one's credit report. However, in this case multiple inquires that are all for the same reason and within a certain time frame of no more that 30 days will not adversely affect your credit rating. Typically, several inquires of this type of situations are only counted as one single inquiry. It absolutely essential for one to maintain a good great score or to improve a poor credit score to keep any inquires to a absolute minimum.


Keep Credit Balances Low

Keeping your credit card balances, line of credit balances low may seem strange but it will affect your credit score. It is important to consider how the payment history on your cards can affect your credit score as well. Also the balances on these cards especially credit cards are calculated into one's score. When the available credit on a card drops below %65 the consumer credit score could be damaged as this reflects a high balance to credit limit ratio. For example you have a $10,000 credit card limit and you are owe over $6,500 in debt. Regardless of payments that are made on time or if more than the minimum payment is being paid, having a high credit balance to credit limit ratio will adversely affect ones credit score. It is imperative to make each payment on time as said before and it is always a good idea to make more than the minimum monthly payment.

Now some people may think that it will be a good idea to make payments to there credit cards to keep them all below the 65% range instead of just maxing out ones card. Well neither is a good idea because you shouldn't be using credit to pay for items to begin with. But note when doing this you will be paying more money over the long run because of interest rates.

Keep Unused Accounts Open

One way for consideration in determining a consumers credit score is how long the account has been open for. A positive credit score is a reflection of a good, positive standing with every creditor the consumer deals with, regardless of the account activity. To simply understand, the longer a positive credit history is maintained, the greater the positive influences on the score. So you have paid off your credit card and have cut it up, Call them and ask them to change your account to a no annual fee account and then simply forget about that card. By keeping that card open will help being a positive factor in raising your credit score, with that being said having to many cards overall can have an adverse affect.

So don't go and start applying for credit cards and just cutting up the card when getting them. This won't help you either. It is always good to have one or two active cards that are being used and being paid in full every month. This will help you in getting your credit score up.

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