| Use These Four Tips To Improve Credit |
| Articles - Mortgage |
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If you have ever borrowed money then you know how important a good score can be. If you have bad credit you may not even get a loan or if you do it usually has a high interest rate. If you have bad credit you are most likely paying hundreds if not thousands of dollars extra every year through higher interest rates. You will save money if you can improve your credit rating. Here are 4 tips to improving your credit rating.
If you have ever borrowed money then you know how important a good score can be. If you have bad credit you may not even get a loan or if you do it usually has a high interest rate. If you have bad credit you are most likely paying hundreds if not thousands of dollars extra every year through higher interest rates. You will save money if you can improve your credit rating. Here are 4 tips to improving your credit rating. 1. Pay Off Your Credit Cards It is best to lower or eliminate your credit card debt. This will increase your credit score. Detail out all of your credit cards and their balances. Make a systematic plan to lower or pay off your balances. Stop using the card and spend only money that you have. If you have more than one credit card then pay off the one with the largest balance. Rating agencies like to see a gap between our credit limit and how much credit you have used. Try to get your balance below 30% of the total credit limit. So if your limit is $10,000 try to get your balance to zero but if that is difficult keep it below $3,000. 2. Pay on time Being a few days late is understandable and can happen to anyone. What you want to avoid is being 30 days late. If you have a decent credit score one 30 day late can drop your score by over 100 points. It seems a bit unfair but unfortunately that is how it works. If you cannot make a payment call your credit card company and tell them that you will not be able to make a payment. Ask them if they can refrain from reporting the 30 day late. 3. Remove Late Payments If you have been a good long term customer a lender or credit card company may agree to erase a late payment from your credit history. You usually have to do this in writing but it is worth the effort. Your FICO score will improve if you eliminate one or more late payments from your record. They may not do it but you should certainly ask. 4. Don't Consolidate Your Credit Card Accounts Applying for a new credit card account can hurt your scores. Oddly enough, moving balances from several cards to one card can hurt your score as well. It is better to have lower balances on several cards than one big balance on one card. Again, lenders look at the percentage of debt you are using on a particular loan. They don't like it if you are using a high percentage. Following this 4 steps will help improve your credit scores. These work best if your score is low to mediocre. If you have a score above 700 you may not see a huge increase in credit score. The bottom line is simply to spend what you can afford, do not be late on payments, pay off your balances quickly, fix any errors on your credit report and don't stiff anyone. Do this for a long enough period of time and you will have good credit. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Slade Tanner - www.SarasotaFloridaMortgage.com |