A good credit score is vital for obtaining good rates for loans and
mortgages. Many factors impact this score. You have too much
credit, you don’t have enough credit, or what you do have is bad.
Here are a few tips for how to improve your credit score:
Too much credit
If your credit score is suffering from too much credit, then
you have to reduce your open credit. There are several ways to do
this.
-
Pay off as many debts as you can. Obviously this will reduce the amount
of credit that you are actively using. Companies look at the number
of open files as a means to determining the amount of credit you
have. -
Obtain a debt consolidation loan to pay off many of your debts especially
the ones with with interest rates. For credit score purposes, one
loan payment looks better than many small debts. -
Pay down credit cards. Credit companies look at the ration of available
credit to the amount of credit used.
Too little credit
Generally this means that your either have little or no credit
history or all of your history is old because you have paid off all
your debt. Companies look at the amount of open credit to determine
credit worthiness as well as as paid off credit.
-
Obtain a new credit card. This will improve your score but only if you
don’t use it. Again companies look at the ratio of available credit
to used credit. -
If you are unable to obtain a regular credit card, get a secured credit
card. With a secured card you give the company a deposit and the
amount of the deposit is the amount of your available credit. The
secured deposit stays with the company until you close your account. -
Get a loan from a bank or credit union. Put this money into a savings
account. Use the money in the account to pay the monthly loan
payments.
Bad Credit
-
Pay off debts, highest interest rate ones first.
-
Obtain a copy of your credit report and have any errors removed by
contacting the credit bureaus.
