The Top Three Things you can do Today to Increase your Credit Score
The process of increasing your credit score may seem like a daunting task, but in reality it just takes time and a good, solid game plan.
If you want an action plan for building or rebuilding your credit, here’s what you need to do:
- Pay all of your bills on time. OK, so this may sound quite explanatory, but in reality late bill payments are the number-one cause of poor credit scores. Many individuals only view payments such as car payments and credit card payments as important in terms of their credit score, but in reality every type of bill payment is important when it comes to your credit score. In addition to the obvious, installment type of loans, don’t neglect student loan payments and utility payments. Remember: every debt and every bill matters in the eyes of your FICO score!
- Get the maxed out credit cards paid down first. Although debt may be the same in the eyes of creditors, your debt-to-income ratio plays a big part in your credit score. In other words, if you have a credit card with a credit limit of $10,000 and you have $10,000 charged on that card, your credit score will take a hit. As a general rule, always try to keep your credit card balances to no more than 50 percent of your credit limit. Your first order of business, therefore, should be to pay down the debt on those cards that are either maxed or near their limit.
- Don’t cancel credit cards along the way. You may be tempted to cancel credit cards as you pay them off, but this may do more harm than good. If you are really tempted to begin spending on your credit cards again, then it may be in your best interest to cancel them. Otherwise, pay them off but keep the accounts active. This open credit available on those paid-off credit cards will boost your debt-to-income ratio, which will in turn boost your credit score.
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