Improving Credit Score
How to improve credit score and get better mortgage rate
It takes time to improve credit score and there is no quick fix. In fact, quick-fix efforts can backfire. Improving your credit scores reflect credit payment patterns over time with more emphasis on recent information. The best advice is to manage your credit responsibly over time.
Scores automatically improve, as one's overall credit picture gets better. That means showing a historical pattern of paying your bills on time and using credit conservatively.
Here are do and don't that you should follow in order to improve your credit score
DO:
1. Pay your bills on time can improve credit score or better, sign up for automatic bill payment. Being late on bills by 30 days or more can make credit scores drop by as much as 100 points.
2. If you have missed payments, get current and stay current. The longer you pay your bills on time, the better your score.
3. Keep balances low (1-9% util) on credit cards and other revolving credit. High outstanding debt can affect a score.
4. Pay off debt rather than move it around to improve credit score.
5. Opening new accounts responsibly and paying them off on time will raise your score in the long term.
6. Apply for and open new credit accounts only as needed.
7. Have credit cards but manage them responsibly. In general, having credit cards and installment loans (and paying timely payments) will raise your score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
8. Watch the timing of your spending. For consumers who plan on applying for a loan it’s best to keep spending down and reduce debt. The lower the balance, the better the credit rating.
9. Make sure credit limits are posted. When creditors don’t report available credit the Fair Isaac’s system might assume that those cards are maxed out which can slash scores by as many as 50 points.DON'T:
1. Close unused credit cards as a short-term strategy to raise your score. NEVER close an open account unless it is costing you money!
2. Open a number of new credit cards that you do not need, just to increase your available credit. This approach could backfire and actually lower your score.
3. If you have been managing credit for a short time, do not open a lot of new accounts too rapidly. New accounts will lower your average account age, which will have a larger effect on your score if you do not have a lot of other credit information. Also, rapid account build-up can look risky if you are a new credit user. Do your rate shopping for a given loan within a focused period of time. FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.Following the advice give below and you will improve your credit score
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