There are many benefits to having a high credit score. Your credit score is taken into consideration when you want to buy a house, rent a house, buy a car, get a cel phone, get cable, and sometimes employers now check the credit history of potential employees. If all of these things are dependent upon your credit score, you need to know how to control it, and what the credit scoring agencies are looking for. Here are the top five things you can do to boost you credit score.
If you don't do this, you will never be able to break into the 700's. It will feel like there is a glass ceiling and you will wonder why your score seems to be stuck. The credit agencies want to see you manage a student loan, a car payment, a house payment, a few credit cards, and a personal line of credit before they will be confident that you can manage your money.
This will drop your credit score faster than anything, and it takes time to build up the momentum for an outstanding credit score. Make sure to never miss a payment and you will see your credit score steadily increasing over time.
You will very likely find an old debt or an unpaid, forgotten bill or two that you didn't even know was on your credit report. These things will be holding back your credit score for as long as they remain on your report, so you need to get them paid off and resolved. As soon as you do this, you will see a rapid increase in your credit score. You may also find some discrepancies, which you should immediately contest or challenge to have them removed.
A maxed out credit card kills your credit score. It shows that you are struggling and have no choice but to charge up your card. It says that you are not in control of your finances. you should try to keep your balances on all of your lines of credit below 50% of the available credit on that line. You can do this by opening new lines of credit and transferring balances to spread them out evenly among all lines of credit, or you can do this by paying down your balances. Either way, you will see your credit score get a nice little boost.
The credit scoring bureaus determine your credit history by looking at your oldest active account, not the first debt you ever had. If you close an old credit card after paying it off, it will still show up on your credit report, but it will no longer be helping your credit score much, since it is closed. Think of it as a managing debt streak. You want to maintain as many streaks as long as you can.
Be careful with using debt as a tool. Many people get into serious financial trouble with this endeavor, because they failed to manage thier money properly and made promises to pay amounts of money that they were not able to pay back. This can result in not only a lower credit score, but also foreclosure, repossession, garnished wages, and even bankruptcy.
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