Now Is The Best Time To Improve Your Credit Score

With the recent tightening up of lending policies, now is an excellent time to take a look at your credit score and see how you can improve it:

Pay your bills on time. Your payment history is 35 percent of your credit score, so keep up with your payments. If you have late payments, the further in the past they are the better. Late payments will affect your credit score more than anything else.

Don’t miss a mortgage payment. Missing a mortgage payment can lower your credit score quite a bit. If money is tight and you absolutely have to miss a payment, try to make it another one of your bills.

Keep your credit card balances low. If you’re like most people and have more than one credit card, try to stay away from “maxing out” one particular card. If you can, spread out your balances or pay the debt down.

Don’t close unused credit cards. The ratio of your overall credit balance to your overall credit limit is 30 percent of your score. Since your ideal debt-to-credit ratio is 35 percent, closing unused credit cards will hurt your score.

Don’t open new lines of credit. Opening new credit card accounts (such as department store credit cards) will negatively impact your short-term credit. New credit is 10 percent of your credit score, so avoid opening any accounts within six months of applying for a mortgage.

Don’t make any large purchases. If you’re going to buy or refinance, don’t purchase any high-ticket items such as a new car or new home furnishings. Try to stay the course in terms of your credit profile.

Don’t change your employment status. Changing jobs will change your credit profile and could affect your credit report. Avoid such a drastic change in your financial status at all costs.

Contact your creditors directly. If you’re having credit problems, get in touch with your creditors and try to work out a payment plan. This will help you in the long run and can stop any snowballing bad credit.

Talk to a credit counselor. Professional credit counselors can help you immensely in terms of improving or maintaining your credit score. They know the ins and outs of the credit business and will help you get on the right track with your credit. ∆