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Four Ways to Improve your Credit Score
In difficult economic times, having a good credit score is especially important. Credit scores, often called FICO scores, help determine the interest rates you receive on loans, credit cards and insurance. They are made up of three components: your payment history on loans, your current debts, and a combination of the length of your credit history, recent credit applications and the types of credit in your history. Credit scores range from 300 to 850, with a good score usually considered 680 and above.
If you need to improve your credit score, here are some things you can do:
- Pay your bills on time. Not paying bills in a timely manner is one of the worst things to impact your score. You can also call the billing company to have items removed from your credit report if you later develop a strong payment history with the company.
- Pay off credit cards.Large amounts of credit card debt hurt your credit score. You also don't want to reach the upper end of your credit limit, keeping your balances at 50% or less of your available line.
- Consider keeping credit cards you seldom use. It's possible that they may be helping your credit score since it is based on the length of your credit history. Just make sure you're not paying an annual fee, and use it a couple times a year and pay it off.
- Fix mistakes on your credit report. Review your credit report once a year. You can do so for free at annualcreditreport.com. If you find any discrepancies, you will need to report them to the agency(s) where the error is in writing (mail or online). They have 30 days to verify your information, or they need to remove the error.
For additional assistance on improving your credit score, contact BALANCE, our financial fitness partner.