How To Improve Your Credit Score

How To Improve Your Credit Score

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Its always in your best interest to improve your credit score. This will help you get better credit in the future and will come in handy when you need to buy a house or apply for a new credit card. Here are ways that you can improve your credit score.

Find Out Your Credit Score

The only way you can improve your credit score is to find out what your current credit score is. You can get a free copy of your credit report by going to annualcreditreport.com. Remember that this is the only authorised online provider of free credit reports. According to the law, you are entitled to get a free report every year. You can get your report online or via mail.

Pay All Your Bills on Time Every Time

Making sure you pay all your bills on time is probably the most important thing you can do in order to improve your credit score. Make sure you pay your bills before or on the due date itself. If possible, set up an automatic debit arrangement with your bank so that your account can be automatically debited for the payment every month. Just make sure theres enough in your account to avoid fees for overdraft.

Remember that if your payment comes in late, there is usually a late payment fee. Aside from the monetary penalty, the late payment will also reflect negatively in your credit report.

Find Out How Your Credit Score Is Computed

Your credit score consists of a complicated equation which the credit companies refuse to divulge to the general public. However, here are the some questions that form the components of the credit score computation.

First, do you pay your bills on time? Your answer to this question is very important. Any late payments will reflect on your credit history. Another item that shows negatively in your credit report is any instance when your account has become past due for 60 days and has already been referred to a collection agency. If youve declared bankruptcy in the past, it shows in your history too.

Second, how much is your total outstanding debt? Nearly all the credit scoring models look at how much credit limit you have and how much you owe at the moment. If youve used up more than 40% of your available credit line, this could lower your credit score. This is why you must avoid maxing out your credit cards.

Third, how is your credit history? If youve had your credit card for years without any problems in the payments, this could improve your credit score. If youve only had your credit card for a short time, you can still improve your score by keeping low balances and by making payments on time.

Fourth, when was the last time that you applied for a new credit card? If you keep applying for a new card in a matter of months, this could negatively affect your credit score. However, if you only get pre-screened or pre-approved credit offers, this wont affect your credit score because this isnt considered as application for new credit. GP

About the Author:
Wilson Field are specialists in IVAs and can help individuals with deal with their debt problems. If you have taken out a loan you may have been mis-sold PPI and Real Claims can aid you in your PPI claims.



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