If you’re in the market for a new house or a new car (or if you think you might be in the near future) you may want to take a look at your credit score. Bad credit scores can not only keep you from getting credit, but can raise your interest rates if you are able to secure a loan. If you don’t know your credit score, you can request a free credit report once each year. Anything over 700 is usually considered a good credit score. Above 750 is ideal.
If your credit score falls below 750, here are some tips that might help you improve it:
Pay your bills on time. This one seems obvious, but a lot of people don’t follow this simple rule. Late payments lower your credit score. If you’re paying online, pay on time. If you’re paying by mail, make sure you send your payments several days before they’re due.
If you don’t have a credit card, get one. But only one. You’ll need to have some sort of credit history to show that you’re able to manage credit. On the other hand, sending out a lot of credit card applications can hurt your score because it may look like you’re desperate for credit.
Keep debt to a minimum. It’s OK to carry a small balance on your credit card(s), but try to keep it at less than 10% of your credit limit (some advisers say 30% is OK). Also, make sure the credit minimum that’s listed on your credit report is the same as what’s on your statement. If not, ask the credit bureau(s) to adjust it.
Use your credit card(s) periodically. You need to actually use your cards to show that you’re good at managing credit and to keep lenders from closing your accounts. Every so often, make sure you buy something with your card, even if you play to pay the balance in full when it’s due.
Check your credit report for mistakes. Get a copy of your credit report (again, it’s free). Look for any outstanding accounts that don’t belong to you or anything that’s marked late that you actually paid on time. Sometimes, mistakes are made when a company confuses two people with the same name, but credit report errors can also be a result of identity theft or fraud. Be sure to dispute, in writing, any charges that do not belong to you or “late” payments that were made on time.
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