How To Improve Your Credit Score

by Guest on July 18, 2012

A credit score is a numerical figure that depicts the credit worthiness of an individual. The credit score sometimes referred to as a FICO score is used by lenders to judge an individual’s financial health. It is an indication of the risk that you pose to the lender compared to other customers. Credit scores are calculated in a number of ways. The three major credit reporting agencies—TransUnion, Equifax and Experian—use a scale of 300 to 900. A higher score on this scale shows that you pose a lower risk to lenders. Most lenders have set up the minimum credit score that an individual can have to access a loan. Apart from that, credit scores are used by lenders in setting the interest rates. It is important to improve a blemished credit score, as it can deny you a car, home or a personal loan. Below are some things that you can undertake, to improve your credit rating.

1. Credit Report

Most people learn about their credit score when they apply for a loan. It is important to get acquainted with you credit score beforehand, so that you can know if you need to work on it before you go to the lenders. The credit report contains the list of accounts that are lowering your credit score. Get a credit report from the three major credit agencies mentioned above, and determine what accounts are okay, and those that need to be worked on. You can access your credit report online for free from websites such as The You should correct any errors present in the credit report, by providing the right information to the credit agencies, as errors really hurt your credit score. For example, an erroneous late payment can lower your score by 60 to 100 points.

2. Paying Bills

Paying your bills late accrues late payment fees that blemish your credit score. It is important to set up payment reminders, to ensure you pay all your bills on time. Paying your bills on time every month raises your credit score by an average of 20 points.

3. Credit Card Balances

•The payment history influences 35 percent of the credit score.
•Having high outstanding debts negatively affects the credit score, so it is important to keep the balances on your credit cards low.
•Having high credit card balances lowers your score by approximately 70 points.

4. New Credit Card

Do not apply for a new credit card if you are trying to improve your credit score. New accounts negatively affect the score, as they lower the overall account age.

5. Pay Off Debts

30 percent of the credit score is determined by the amount of debts you have. It is important to start paying off your debts whether it is a college loan, a car loan or a mortgage. Paying off your debts shows lenders that you can are not a defaulter, and can be trusted with money.

6. Avoid Overdrafts

Many people have issued more checks than the cash they have in the account, leading to an accidental overdraft. Banks do not bounce the check, but instead charge an exorbitant fee for the negative account balance. Consistent overdrafts indicate poor financial skills, and damage your credit score.

Related Post


{ 1 comment… read it below or add one }

Belinda February 26, 2013 at 1:59 pm

Greetings! Very useful advice in this particular article! It is the little changes which will make the greatest changes.
Thanks for sharing!

Leave a Comment

Time limit is exhausted. Please reload CAPTCHA.

Previous post:

Next post: