Friday, 13 March 2009 14:48
by
Lone
Your Credit Score - What You Need to Know
Knowing how to improve your credit score can really make a difference when applying for credit. Credit scores are three-digit numbers lenders use to gauge your credit worthiness and will determine the best rates and terms. These days, lenders have tightened their criteria so it is important to know what can hurt and what can improve your score, and it’s more than making your payments on time.
· Monitor your credit – You can get a free credit report once a year from each of the three credit agencies online at AnnualCreditReport.com. It only takes minutes! Review all information for accuracy and contact the credit agency immediately if you see any discrepancies. I recommend pulling your credit report from one of the credit agencies every four months, rather than pulling all three at the same time. If you would like someone to help you review the credit report, please stop by your nearest FORUM branch for assistance or call us to set an appointment. We will be glad to review your credit report with you.
· Don’t let disputes go to a collection agency – Even if your insurance company was supposed to cover the doctor bill, don’t let it escalate, because collection items will show up on your credit and immediately affect your rating.
· Arrange automatic payments for all of your bills. It’s so easy to let our busy schedules get in the way, but don’t let it ruin your credit score. Utilize a free on-line bill payment service which makes it easy to schedule payments ahead of time, and saves you time and money on stamps and post office runs. Not only will you be faced with a fee for being late but you also may see your rate spike with just one late payment.
· Available Credit. More than a third of your credit score (FICO) depends on how much of your available credit is utilized. The FICO score looks at big gaps between your balances and available credit. In general, it is better to have small balances on a couple of credit cards, rather than a high credit card balance on one card. Of course paying your credit cards off every month is even better and should be your goal. However, if you do carry a balance try to shoot for a balance of below 10%. The less of your available credit you use, the more FICO rewards you.
· Closing credit card accounts do not help or lower your credit score, as you might think. On the contrary, if you close a credit card and still have a card left with a high balance, your score may be lowered because of having less available credit. But, if the temptation of having a credit card with an available balance is too great and becomes part of your daily budget, you are better off closing the credit card account.
· Apply for credit sparingly. Too many credit inquiries can lower your FICO score and every point counts when you are applying for an auto or mortgage.