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Beware
of Credit you don’t Use
In
this day and age it is very easy to acquire a bagful of credit cards and
store cards that we never ever use. At every store people are offering
you cards for this and that. What you must realize that even if you
never use any of these cards, their
existence is noted on your credit
report. Keeping these cards can make you appear a bad credit risk to
lenders ass it gives you an opportunity to over extend your credit.
In
addition to this if you have used the card there is a chance that you
can forget about an old account and miss payments which in turn results
in lower credit score. It is much easier to keep track of your debt if
it is only spread between a limited number of sources and this will be
reflected in your overall credit rating.
Have
a number of credit types
Prospective
lenders are often looking to see if you can control a range of different
types of credit. If you have for instance a credit card and a car loan
that are both up to date this reflects positively on your overall credit
score.
If you find that your credit score is lower than you expected there
could be a number of reasons. You could have been a small financial
error in the past, personal circumstances or you could have been a
victim of fraud.
Pay your bills on time for a higher
credit score
Probably the best way for you to get yourself a good credit score is to
simply pay your bills on time and not let them add up and get beyond
your ability to manage them. This is exactly what lenders want to see,
that you are able to pay off your debts and that you actually do
take your debts seriously. It shows them that you can deliver exactly
what they are looking for, to paid them in full and on time.
If
you can manage to pay off your current bills in time, it can be used as
a good indicator that you will manage to pay any new bills or debts you
receive in the same manner. This is just what lenders want, and credit
experts even think that this small factor is what 35% of your credit
score is based on, making this a very simple way to vastly improve your
credit score.
Keeping
you debt down by paying your bills in time also helps you manage your
debt better as you won’t get hit with late fees and other penalties
that arise from not paying your bills on time. So, if you manage to pay
your bills on time it is a good way for you to be able to continue to
pay them on time, as doing this means you pay less.
As with everything else though, there are two sides to this. Should you
have not managed to keep paying your bills in time then your credit
score will show this. In order to increase your score again, you will
have to pay your bills on time, and it will take many months of doing
this to make any visible change, but it will be well worth it when you
end up paying less and with a better credit score!
Decrease
your Debts
In
an ideal world you would completely clear your credit card debt at the
end of each month, if you are unable to do this you should consider
paying down your dept to ensure that your credit rating isn’t
adversely changed. Try to clear as much of the debt each month as
possible so any further lenders can see that you take the debt
seriously.
The general rule is to try and only use about half of your credit card
limit i.e. if your limit is $5000 try and bring down the debt to roughly
$2500 and try not to increase it above this amount. The more you lower
the outstanding debt the more your credit score will increase. Even
better is if you can clear the complete debt at the end of each month.
Not only will your credit score increase but you will not have to pay
interest on the outstanding balance. |
