How To Improve Your Credit Score

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The following is a guest post. Enjoy! 

How To Improve Your Credit Score

 

If you’re trying to improve your credit score, it can be difficult to figure out where to start.  It is important to remember that your credit score is a direct reflection of how you’ve handled your credit, so it reflects your actions around your credit.  The easiest way to improve your credit score is to be responsible with credit going forward.

 

Be On Time, Every Time

 

One of the biggest impacts on your credit score is your payment history.  This accounts for roughly 35% of your overall credit score, according to FICO.  Your payment history is a direct reflection of how often you’ve paid your bills on time and in full.  So, the easiest way to improve your credit score is to make every payment on time going forward.  After about 6 months, you should see improvement in your score.  You also need to make sure that you are making at least the minimum payment each time as well.

 

 

Have Different Types of Credit

 

New credit and types of credit each impact your score by about 10%.  This means that you should open different types of credit from time to time to diversify your score.  This could include money from credit cards, auto loans, mortgages, and small personal loans from the bank.  Basically, anyone who reports your credit to the credit bureaus can have a positive impact on your score, as long as you are on time with your payments, every time. Also, a word of caution – utility bill payments in your name go on your credit report as well. So, make sure you are current on those.

 

 

Always Pay It Back

 

Finally, you always have to pay back your debts.  The amount you owe makes up roughly 30% of your credit score, so the less you owe, the better your score.  However, you will need loans and credit, so don’t fret about debt.  However, just make sure that you always pay back the amount you borrow, and pay it back on time.

 

Length of Credit History

 

Finally, the length of your credit history plays a part as well.  It will take time to improve your credit score, since everything remains on your report for years. As a general rule of thumb, it reflects better of your credit score if you have accounts open longer. On the other hand, closing old small loans can sometimes decrease your credit score.  However, maintaining these tactics over a sustained period of time will help you get your score back!

 

How about you all? What habits do you practice to keep you credit score high? 


Share your experiences by commenting below!

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