Improving Your Credit Score

"MY CREDIT SCORE IS NOT AS GOOD AS I WOULD LIKE IT TO BE. ARE THERE ANY WAYS THAT I CAN IMPROVE MY SCORE?"

The most important factor that affects credit scores is late payments. To put it simply: pay your bills on time. This may seem obvious, but many people fail to do this. Remember that a recent late payment affects your credit rating more than a late payment from a year ago or several years ago. Also, keep an eye on your “revolving credit,” namely your credit cards. A good rule of thumb is to keep your balances around 25 percent of your total credit limit. Opening new credit card accounts or “spreading” around your balances probably won’t improve your credit rating because your credit score may be lowered if you have newer accounts. As for old or unused credit card accounts, don’t close them. By closing unused accounts, you will increase your ratio of debt to credit limit, thus lowering your score. The key to credit cards is to pay them off. Finally, check your credit report for any errors that may reduce your credit rating. If you encounter any errors, check with the consumer reporting agency and your lender. It may take up to thirty days to correct any mistakes, so you should check your own credit report at least a month or two before you start the home buying process.  ∆