Many people are very concerned about improving parts of their lives. One thing that every adult should be interested in improving is their credit score. It is easy to forget about a credit score until a person decides they want to apply for a credit card, a car loan, or they want to buy a house. When it comes time to do one of these things it is usually too late to improve a credit score enough to affect what the credit company or bank are willing to offer. It is very important to begin today to improve a credit score; however may people don’t know where to start. Here are a few improvement methods that can be used to help improve a credit score.
No quick fixes
Though it would be nice to be able to improve a credit score quickly, most ideas that people have for quick fixes tend to backfire. Things such as closing unused credit cards or opening new credit cards that a person doesn’t need can actually lower a credit score. It is also important to understand that closing an account does not make it disappear off a credit report. It could still be considered in the person’s credit score. Though finding out that there are no quick fixes to improving a credit score, a person shouldn’t get discouraged. It is not impossible to improve a credit score, it just takes some time.
The length of credit history
The length of a person’s credit history is vital to their credit score. This part of a person’s credit score does take some time and there are a couple of things a person should know if they are just starting to acquire credit. First, it is very important for a person not to open too many accounts if they have only been managing their credit for a short time. New accounts actually lower the average account age and can have a negative effect on a person’s credit score. Also, it can be difficult to apply and get a credit card when a person has no credit history. Someone in this situation can get a secured credit card, where the lender gives the person a line of credit that matches, or is a little higher than, a cash deposit that the person gives the lender to hold. To increase the person’s credit limit, the lender will have to see that the person is responsible in their credit usage. This can also help the person get used to using a credit card the correct way before they branch out and get another credit card.
The longer a person pays their bills on time, the better their credit score will be. If a person misses payments or is sent to a collection agency this will negatively affect their credit score. A person should begin as soon as possible to pay their bills on time and continue to pay them on time. By doing this, their score will begin to improve.
Paying off debt
Having high balances on credit cards will negatively affect a person’s credit score. It is very smart for a person to keep their credit card balances low. It is also better for a person to pay down or pay off debt instead of moving it around. It could actually negatively affect a person’s credit score if they owe the same amount of debt but have less open accounts.
Manage new credit intelligently
When a person applies for new credit, such as applying for a credit card, this is a great time to start off right. A person should pay the payments on time and keep a large distance between the credit card limit and the balance. It is important for a person to watch the interest rates on their credit card. Even something such as a late payment on a phone bill could increase the interest rate of a credit card which can cause an increase in debt. A person needs to be careful and stay on top of their credit cards and the other new forms of credit they may have.