Improve credit score by following some simple, basic, common-sense steps. Now you know why a
good credit score is very important and why having bad credit on the other hand may lead you to the poorhouse. Having bad credit cost you money by only qualifying you for poor credit auto loan
. If you have really bad credit, you won't be able to buy anything. We know how people with good credit easily qualifies for any kind of loan, including a mortgage and that spells wealth because home values appreciate (whereas the values of cars depreciate).
In the end, all things being equal, people with good credit have more money in their pockets than people with bad credit. Being responsible with your credit pays. And in many cases, it pays a lot!
A survey released jointly by Providian Financial Corp. and the Consumer Federation of America indicates that only 31 percent of those surveyed had obtained their credit score in the last year to check how their credit stands. Only 27 percent understood that credit scores measure credit risk, not knowledge. Nearly half of the respondents didn't know that a maxed-out credit card would lower a credit score. The national poll found that consumers are becoming more knowledgeable about credit scores and how they impact them financially but the majority of them don't have a clue.
In this "Information Age", relatively few consumers have taken the time to find out how to improve credit score
even though the reality is: their score affects almost every financial move they make. Lenders use the scores in deciding what interest rates to charge for credit cards, loan for car , and home mortgages. Insurers use customized credit scores in deciding who to insure and how much to charge them. Even some employers draw on the same data in making hiring decisions.
According to Tom Quinn, vice president of global scoring solutions for Fair Isaac Corp., the Minneapolis company that developed the grade-point average of creditworthiness (FICO score ), credit scores really does touch our every day life and that in today's economy, our credit rating drives so much of our ability to survive. The median credit score is 723. Credit scores are three-digit numbers that range from a low of 300 to a high of 850. The higher the number the more favorably lenders view you as a credit risk. Conversely, the lower the number, the more lenders see you as a liability for them.
To improve credit score is a matter of knowledge of consequences if we don't follow the rules. Much as accumulating traffic tickets if you don't follow the rules of the road, resulting in traffic fines and high car insurance premiums, having late payments in your credit record result in higher finance charges and inability to buy investments, even not getting the job that could be financially rewarding for you. Having good credit score is very important.
Here are tips to improving your credit score and keeping your financial health in tiptop shape:
Payment History Tips
Pay your bills on time. It helps to always give enough time for the mailman to deliver your bill. Allow at least 10 days. If you can arrange an online bill payment, Bank of America has one, so much the better. Delinquent payments and collections can have a major negative impact on your FICO score .
If you have missed payments, get current and stay current. Most of the time, it's simply carelessness that makes you late - like misplacing a bill or not knowing the due dates for your bill. The longer you pay your bills on time, the better your credit score.
Be aware that paying off a collection account will not remove it from your credit report. It will stay on your report for seven years. That knowledge alone will spur you to find alternative solution to pay your outstanding bills.
If you are having financial difficulties, contact your creditors at once or see a legitimate credit counselor. This won't improve credit score immediately, but if you can begin to manage your credit and pay on time, your score will get better over time. Get your phone book or the internet and start looking for one ASAP. Research them if possible.
Amounts Owed Tips
Keep balances low on credit cards and other “revolving credit”. High outstanding debt can
affect a credit score. Find ways to keep your balance low as it will help improve credit score.
Pay off debt rather than moving it around. Start paying off cards with the highest interest rates and continue on with the ones with the lower rates. The most effective way to improve credit score in this area is by paying down your revolving credit. In fact, owing the same amount but having fewer open accounts may lower your score.
Keep unused credit cards open. Closing them may adversely affect your credit scores.
Opening numerous accounts for more available credit might negatively impact your credit scores.
Length of Credit History Tips
Don't open a lot of new accounts if your credit is new. Lenders will see you unfavorably because you don't have enough of other credit information.
It's alright to request and check your own credit report. If you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers, your credit score won't be affected.