Advice on How to Improve a Credit Score Without Gimmicks

Written by , June 6, 2012

Advice on How to Improve a Credit Score Without GimmicksEven as interest rates on home mortgages and some consumer debt remains relatively low, it’s as important as ever that you keep your credit score healthy. Not only can having a good credit score make it more likely you’ll get a good rate, it might also make the difference between getting the loan at all, and being rejected.

While some will advise you to start looking at tricks and gimmicks such as credit piggybacking in order to improve your score, taking charge of your own financial future doesn’t have to be such a gimmick.

Here is some borrowing and credit card advice you should consider for improving your credit score.

  • Find and Correct Errors on Your Credit Report. Hopefully you are already in the habit of obtaining free copies of your credit reports each year. If not, request them now and review your most recent reports for any errors. The credit rating agencies use information from your reports, so any incorrect negative information is improperly lowering your credit score. Do this at least once a year to make sure your credit score is based on accurate information.
  • Pay Your Past Due Accounts as Soon as Possible. One of the factors that can damage your credit score is being past due on any of your credit obligations. This might be a late payment on your mortgage, your car loan, a credit card, a student loan, or even a late payment on a utility bill or rent. That’s right; even non-creditors like a utility or landlord can report late payments to the credit bureaus. Bring your accounts to date as soon as you can, and if you must prioritize then pay back the most recent of your late payments first.
  • Ask Creditors or Other Reporting Parties to Remove Negative Information. Once you’ve cleared up your late reports, you can ask the reporting parties to remove the negative information about the late payment. Furthermore, if you feel comfortable doing so, you can ask them to remove the negative information even before you satisfy your late payments. There’s no obligation for them to do so, but it’s probably worth asking for.
  • Keep Your Oldest and Biggest Credit Card Accounts Open. The longer you’ve had a particular credit card, the better your credit score will be. Long term accounts are looked upon more favorably, because they demonstrate your ability to manage credit over time. In addition, you should also preserve the accounts with the largest credit limits, as those are more favorable for your credit utilization ratio.
  • Stop Opening Too Many New Accounts. Finally, stop opening store credit card accounts and other limited purpose lines of credit without fully considering the consequences. These accounts can negatively affect your credit utilization ratio, and too much new account activity on your credit report might also be interpreted as a negative when calculating your credit score.
  • Don’t take a passive approach to your credit report or give up trying to change it. It might take some time and effort to improve your credit score, but it’s worth that effort.

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