Raising Your Credit Score

To continue on this week's theme of credit scores, today I will share some pointers of raising your credit score. Your credit score is a relative indication about your financial health, since most transactions today use credit through credit cards or loans of some type. The higher the score, the more likely you are to paying it on a timely basis.

Yesterday, I mentioned the factors used in determining your credit score. If you make a few improvements, especially in the areas that carry the biggest weight, it can make a big difference. First, there is punctuality of payment. If you have any outstanding payments past due 30 days or more, this is a serious problem. Eliminate and prevent new occurrences will raise your score up significantly over time.

Then, if you carry balances over from month to month and they are near your credit limit, this will drag your score down. Also, a high number of accounts you have open with balances will also hurt you. Pay some of the lower amounts off and close the accounts to raise your score. The higher the ratio between outstanding revolving debt (credit cards) and available credit (credit limits), the lower your score will be. Even having a lot of credit cards with $0 balances is not the best thing. Only use what you need, and close the other accounts. You can also request them to lower your credit limits, which can raise your score. In this case, you are less likely to overspend.

Meanwhile, maintain low-to-moderate balances and be sure to make your payments on time. Your score should improve as your revolving credit history ages. Consolidating or moving your debt around from one account to another will usually not, however, raise your score, since the same amount is still owed.

The next item is fairly obvious, but needs to be stated. Avoid bankruptcies, foreclosures, and judgments against you. If you have these and apply for credit, you will almost surely be denied. If you are given some credit, it will usually be very high rates, sometimes around 30% per year interest. This is like giving a drowning man a cement block to hold. Bankruptcies won't usually come off your credit report for 6 or 7 years.

The next area can be grouped around length and type of credit used. Consumer finance companies (including collection agencies) are the worst type of credit to have in relation to your credit score. It signifies that your credit health is very weak. Installment loans are the best type of credit concerning your credit score, because of its regularity. Here are some other pointers. A long credit history is better than a short one. Recent credit information is better than really old data. A lot of credit inquiries over time is also bad for your score. Only apply for credit when you need it.

There will be more this week regarding credit. Stay tuned ...

who lends his money without usury
and does not accept a bribe against the innocent.
He who does these things
will never be shaken. Psalms 15:5 (NIV)

If you have comments or questions, please feel free to contact me at the address below.
Email: DeltaInspire@panama-vo.com