• Ndidi Ihim

The 5 Simple Tips That You Can Follow to Improve Your Credit Score

Your credit score/FICO report can define your qualification for mortgages, what interest rate you pay for loans, and even whether you get a job to which you are applying. With every incentive to grow your score and nothing to lose, it should be a priority step in getting your financial life on track.

Here are 5 steps to improve your credit score.

Tip #1: Request your report (FREE)

The first step in repairing your credit is to get a grasp on your current score. The Federal Trade Commission has an agreement with the Big Three credit reporting agencies to provide every U.S. citizen with a free credit report every 12 months. To obtain your free copy, visit the official Annual Credit Report Request Service Web site and follow instructions for requesting your report.

Tip #2: Pay on time:

35% of your FICO score is defined by how timely you pay your bills. If you have missed any installments in the past few years, it will probably help your score significantly to go back and fix your past-due status with the lenders involved. By settling your overdue bill, your mortgagers will eliminate these glitches from your report from each reporting agency.

Hint: go back and pull your report again later to make sure that all three of the agencies have removed the problem from your records as promised.

Tip #3: Get the balance (of credit types) right:

10% of your credit score indicates the particular variety of types of debt you have and the credit lines you have accessible to you. Make sure you have the right mix of auto or home loans, department store cards, charge cards, and credit cards. This healthy mix shows potential lenders that you know how to handle different types of debt.

Tip #4: Reduce your debt:

Your debt-to-credit ratio is the ratio of the amount you owe versus the amount of credit extended to you. It determines a full 30% of your credit score. There are three ways to reduce your debt: 1. Make more money; 2. Put more of your current earnings toward paying off your debt; 3. Decrease the cost of your debt. One great way to lessen the cost of your debt is to transfer your current credit card balances to credit cards with lower interest rates. Doing this can save you $100s per month in debt repayments if you have high credit card balances.

Tip #5: Open more lines of credit:

You can also improve your debt-to-credit ratio by actually raising the amount of credit extended to you. The key here is to do so while dodging using these new credit cards. To avoid using the cards widely, make a purchase or two with them each month and then hide them so they are not readily available. Also: if you do open more lines of credit, do so over a few months since having too much new credit can hurt your score.

There are many straightforward ways to fix your credit score. So, pull your free report, evaluate your situation, and start taking steps toward a better financial life.

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