Title:
How To Improve A Low Credit Score
Word Count:
830
Summary:
Do you have a low credit score?
If your credit score is below 700, you may not qualify for some of the best interest rates on credit cards,
loans or mortgages. This means that just by having a credit score of 695, instead of 725 (just an example),
you may end up paying thousands more in interest on any new credit you are granted, which you can avoid
by just taking some simple steps to increase your credit score before applying for a new personal loan, auto
loan or mortgage...
Keywords:
credit score, improve, increase, credit report
Article Body:
Do you have a low credit score?
If your credit score is below 700, you may not qualify for some of the best interest rates on credit cards,
loans or mortgages. This means that just by having a credit score of 695, instead of 725 (just an example),
you may end up paying thousands more in interest on any new credit you are granted, which you can avoid
by just taking some simple steps to increase your credit score before applying for a new personal loan, auto
loan or mortgage. It is widely believed that a credit score of 720 or higher is ideal.
How to improve a low Credit Score
If you have a recent bankruptcy on file, repossession, foreclosure, missed or late payments... it will take time
to bring your credit score back up after such a blow. If you are in this position, in the mean time just be sure
to borrow "within your means" (although you may have trouble getting approved for any new credit) and
don't overextend yourself. Keep paying your bills on time, and you will be back on the road to raising your
credit score.
If you pay your bills on time, don't have a recent bankruptcy on your record, and don't have any missed
payments or collections on file, look at your credit card balances. Normally you will want to keep your debt-
to-credit limit ratio, on your credit card accounts, below 25%. If you owe more than 25% of your total credit
limit on your credit cards, consider paying them down.
Example: if you have a credit card with total credit line of $10,000, and you have a balance of $2,500 on the
card, you would owe 25% of your total credit line on that card.
Also keep in mind that even if you pay your credit card balance off each month, it still may be reported to
the credit bureaus that you are carrying a balance on that card. It depends on what time of the month your
credit card issuer reports to the credit bureaus, they will list whatever your balance is on the day they report
it. However, most (if not all) lending institutions are aware of this, so this is generally not something to
worry about.
Too many open credit card accounts
Also, too many open credit card accounts can be a bad thing. But, if you already have several open credit
card accounts in good standing, don't cancel them, the added "good" credit history can help your credit
score. If you find that you have way too many open credit card accounts and you have decided to cancel
some of them, be sure to cancel the most recently opened accounts. Keep the oldest accounts open.
Normally the longer your payment history on an account, the better your credit score will be.
Try not to open any new credit card accounts that aren't necessary. Generally when you open a new credit
account, it will lower your credit score slightly, at least for a short period of time.
How you manage your "revolving credit" (credit card accounts) is a big factor in determing your credit
score.
Newly Opened Credit Accounts
Usually your credit score will take a slight hit from newly opened credit accounts such as credit cards, auto
loans, or mortgages. How many points your score will decrease depends on how many times you have
applied for credit in recent months.
However, this decrease is only temporary, your score should rise again after several more months of making
your payments on time. Normally this is not something to worry about, unless you have submitted many
applications for new credit in a short period of time. That may indicate to credit issuers that you are
beginning to overextend yourself (applying for too much credit), or that you are being denied credit and you
keep trying other lenders hoping for a different result.
Short Credit History?
If you have a very short credit history (length of time you have been using your credit), that can also be a
reason as to why you have a low credit score. Keep paying your bills on time and follow good overall credit
management, and rest assured - with time - your score will rise!
No Credit History?
If you have absolutely no credit history, your credit score will most likely be low to start with. You can get
started by applying for a credit card in an attempt to establish your credit history, or if you are trying to
obtain an auto loan, but haven't had any luck getting approved because of a short credit history (or no credit
history), you can ask someone you trust to help you by co-signing on a loan with you.
These are just 2 of the ways you can start establishing your credit, but probably the 2 most common ways.
When you are approved for your first credit account, be sure to pay your bill(s) on time, and you will be on
your way to a better credit score!
credit disputes letters