Four Ways to Raise Your Credit Score
It's a well known fact that lenders will give people with higher credit scores lower interest rates on credit cards, loans and mortgages. However, if you’ve got a low credit score, don’t despair, there’s plenty you can do to fix it. Here are four simple tips that you can use to raise credit score:
1. Get a copy of your credit report
Obtaining a copy of your credit report is a good idea because if there is something on your report that is incorrect, you will raise credit score once it is removed. Make sure you contact a credit reference bureau immediately to remove any incorrect information. Your credit report should come from the three major bureaus: Experian, Trans Union and Equifax. It's important to know that each service will give you a different credit score.
2. Pay Your Bills on Time
Your payment history makes up 35% of your total credit score. Your recent payment history will carry much more weight than what happened five years ago. Missing just one month’s payment on anything can shave a significant proportion off of your credit score. Paying your bills, including credit account repayments, on time is a single best way to start rebuilding your credit rating and raise credit score for you.
3. Don't Close Old Accounts
In the past people were told to close old accounts they weren't using. But with today's current scoring methods that could actually hurt your credit score. Closing old or paid off credit accounts lowers the total credit available to you and makes any balances you have appear larger in credit score calculations. Closing your oldest accounts can actually shorten the length of your credit history and to a lender it makes you less credit worthy. If you are trying to minimize identity theft and it's worth the peace of mind for you to close your old or paid off accounts, the good news is it will only lower you score a minimal amount. But just by keeping those old accounts open you can raise your credit score.
4. Don’t Declare Yourself Bankrupt
Declaring yourself bankrupt is the single worst thing that will destroy your credit score. Bankruptcy will lower your credit score by 200 points or more and is very difficult to come back from. Once your credit score falls below 620, any loans you get will be far more expensive. A bankruptcy on your credit record is reported for up to 10 years. The reality of a bankruptcy is it will limit you to high-interest lenders that will squeeze out high interest rate payments from you for years. It is better to get credit counselling to help you with your bills and avoid bankruptcy at all costs. By getting credit counselling instead of declaring bankruptcy you can raise credit score over a much shorter period of time.
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