How To Improve Your Credit Score

As most of us are already aware, having poor credit can drastically lower the quality of life and create a barrage of headaches. Without a decent credit rating it’s very difficult to qualify for a home loan, auto loan, or business loan. These days many renters even run a credit check on prospective applicants, making it difficult to even rent a home if you have poor credit. Keeping your credit score strong should be one of the main financial mainstays of sound financial planning. In the article below we’ll offer you some tips and tricks that will help to keep your credit score healthy.

The best way to improve your credit score above and beyond anything else, is to pay off as much debt as you can. Open credit lines with carried balances can drastically reduce your score, especially if your credit lines are maxed out. Try to pay off as much of your outstanding balances as possible, even doubling up on some payments in order to strike hard at your outstanding balances. The FICO credit score, used by most lenders, pays particularly close attention to unpaid debt, and it’s predicted that this factor will become a larger part of credit ranking in the future.

Another sound tip for improving your credit score is to only use a small fraction of your available credit. If you haven’t already utilized a large percentage of your existing credit, then try to keep it that way by paying for items and goods with cash in hand. Many consumers in the United States live well beyond their means, with the end result being high unpaid balances and poor credit scores. Avoid this pitfall by only buying what you absolutely need, and your credit score will thank you for this over the long haul.

A creative way that some people use to improve their partially blemished credit rating, is to piggyback on the higher credit rating of a friend or family member. If you are responsible with money and pay your bills on time, then usually people within your social circle will consider co-signing with you on needed loans. One point of advice on this subject would be to only solicit the help of a co-signer for necessary loans. Don’t frivolously borrow with a co-signer for funds that you don’t really need, as the risks involved with defaulting could potentially damage both credit scores involved.

Have you ever heard of a secured credit card or loan, where funds are deposited in advance? There are many secure credit options available to consumers, and these loans are excellent for establishing credit and repairing damaged credit. If used over the long run, they will demonstrate to potential lenders that you spend responsibly and pay your bills on time. And, because the credit line is secured, both the consumer and lender have little risk involved with the accounts.

Another really obvious tip for improving your credit score, is to become a very financially organized individual or household. Mark down payments due on a highly visible calendar, and do your absolute best to pay all of your bills on time. Numerous people damage their credit score by missing payments do to forgetting the payment date, rather than because they don’t actually have the funds to pay the bill. Don’t make this mistake. Spending as little as 5 to 10 minutes a day looking over your financial state is usually sufficient for avoiding missed or late payments. Organizing your finances will also ensure that you don’t overdraw the bank accounts that you use to pay your bills. A simple miscalculation on a funds transfer or paycheck deposit can snowball into a late or missed payment. With proper planning you can make sure that this doesn’t happen to you.

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