Your credit score is a figure lenders use to decide whether or not to give you
credit or a loan, to determine your credit limit, and sometimes the interest
rate you will pay. Landlords may also use it to decide whether or not to rent
you an apartment. Services such as gas, phone, and electric may require a
higher deposit if you have a lower score. It pays to get and keep your credit
score as high as you can.
Video: Insider Techniques to Raise Your Credit Score FAST!
What’s your score?
If you are having trouble obtaining credit or a loan or renting, or if you are
being hit with higher interest rates than others you know, your credit score
may be to blame. To find out if this is the case, you need to get a copy of
your credit report. The three nationwide companies that produce credit scores
are Equifax, Experian and TransUnion. The Fair Credit Reporting Act requires these agencies to give
you a free credit report once every 12 months if you request it. This can
only be done through a central facility (by website, phone or mail) they have
set up. Get a copy of your credit report from each of the three companies (they
can vary) and go through them carefully. If there is anything you believe is
inaccurate, contact both the reporting company and whoever provided the company
with the incorrect information.
Video: Six Effective Ways to Improve Your Credit
When is enough enough?
As far as credit cards are
concerned, the fewer the better.
There can be very good reasons for
having a number of credit cards, but
using them to increase your overall
credit limit is not one of
them—especially if you take out a
number of new cards over a short
period. The rating companies do not
like this. They see it as risky
behavior—and they’re probably right.
Pay your bills on time
Paying all your bills in full on
time is the best way to get and keep
a good credit rating. If you just
can’t pay the full balance of your
credit card, at least make the
minimum payment on time. This can
actually be better for your credit
score than paying the full amount
even a day or two late, which can be
penalized in your credit score as
well as costing you an exorbitant
amount in fees.
Don’t transfer balances; pay them off
Don’t fall into the trap of transferring balances to a card promising a
low introductory rate without very carefully reading all the fine print.
Believe me, there’s almost always a catch, and the credit scorers are
prone to see transferring balances as a bad sign. It is far better for your
credit score to pay off your balances as fast as you possibly can.
Make a fresh start
Having paid out your outstanding balances, take out a few new cards that really
suit your needs and offer the longest billing cycle. Then pay the outstanding
amount each month on time. Your credit score will soar. If you can’t do
that, look for cards with the best compromise between long billing cycle and
low interest rate and pay off as much as you can of the balance each month on
time.
Don’t spend to your limit
Credit rating companies start to get
concerned if your balance is
regularly more than about 25% of
your limit, and will lower your
score, which will lower the credit
limit you can get, and so on.
Don’t go bankrupt
You may have seen ads suggesting the way out of all your financial difficulties
is to go bankrupt. Don’t believe it! Bankruptcy is the absolute death knell of a credit score,
and you must avoid it like the plague.
Don’t be foreclosed
Foreclosure is almost as big a disaster to your credit score as
bankruptcy. Don’t let it happen! Act fast and act early—as soon as
it looks like you may have trouble making repayments. Talk to your lender and
try to work out a solution. Explore all avenues of government assistance.
Contacts
Annual Credit Report Request Service
1-877-322-8228
Your credit score is a figure lenders use to decide whether or not to give you
credit or a loan, to determine your credit limit, and sometimes the interest
rate you will pay. Landlords may also use it to decide whether or not to rent
you an apartment. Services such as gas, phone, and electric may require a
higher deposit if you have a lower score. It pays to get and keep your credit
score as high as you can.
