Improve Your Credit Score With These 5 Tips

The higher your credit score the more money you can save. Simply put, your credit score is a number based on how well you pay back loans on time, and is sometimes referred to as the FICO score. The higher the score, the less risky you are, meaning you are more likely to pay your bills on time. The three major credit bureau are Experian, Equifax and TransUnion.

The minimum standard most creditors set is 620. Anything below that and most banks will not loan you money. However, any score above 700, will get you comparitively low rates. If you reach a credit score above 760, you can usually get the lowest and best rates available. The perfect credit score is 850. The average credit score is 723.

Although, each consumer is entitled to a free copy of your credit report annually from each of the agencies named above, under the Fair and Accurate Credit Transactions Act, you will still have to pay a fee to get your actual score, generally about $6.

If you want to note any changes, a good idea is space your requests out every four months instead of getting all three at once. That way you can track changes.

To improve your credit score here are the top five tips:

#1. Don't apply for credit cards you don't need - New accounts lower your credit score by an average of 10 points.

#2. There is nothing wrong with having credit cards - Especially when you are debt-free, it is easy discount all credit cards and loans But borrowing and paying it off just one time can boost your credit score. On the other hand, if you have no credit cards or no installment loans, lenders consider you be a higher risk as there is no record of any loan repayment.

#3. Pay your bills on time - Paying your bills late, show up in a special area called "Adverse Accounts" and it lists what month you were late and how late you were and this is usually kept for 7 years. Paying your bills on time can raise your score as much as 20 points just in one month.

#4. Keep you credit card balances low - Maxing out your credit cards can lower your credit score by 70 points.

#5. Closed accounts don't go away - Most details of credit history files are kept for a long time.

Hopefully, this information will help to keep your credit in order.

See also:

How Poor Credit Scores Can Costs You More

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