5 ways to increase your credit score

Do you know your credit score? If you don’t you need to find out. So much depends on a good credit score. The interest rate you pay on your credit cards is determined by your credit worthiness. If you apply for a mortgage or refinance the mortgage you have, the interest rate you receive depends on your credit score. The amount you pay for car insurance is determined by your credit score. Insurance companies feel if you don’t have a good score your statistically more of a risk, resulting in higher insurance premiums.

If you don’t know your credit score, you need to find out right away. There are many websites that offer your credit score and credit reports. Most of these are websites that charge a large fee and sometimes a monthly fee. But through a government authorized website called annualcreditreport.com, you can receive one at no charge.

If you find that your credit report is in bad shape there are 5 things, according to financial columnist Liz Weston author of “Your Credit Score,” that you can do to repair the damage.

1. Check for mistakes.

Read your credit report and look for obvious mistakes. Is your social security number and date of birth correct. Are there credit cards listed that don’t belong to you on the credit report.

2. Remove Errors.

By law credit report companies are required to investigate mistakes. In writing, contact the credit reporting service listing all errors. It is their job to check out these errors. If they can not verify the accuracy of the items, by law they must be removed.

3. Pay your bills on time or early.

More than one-third of your credit score is determined by your payment history. If you are paying your bills late it will be reflected on your credit report.

4. Reduce your credit card balances.

If you are using most of your total available credit, it’s seen as a red flag on your credit report. You can’t do much about your mortgage balance but you can reduce the balance on your credit cards.Pay them down so the balance is less than half of your available credit. If your cards are maxed out it shows you are not paying your cards down but merely just hanging on financially. Why would they lend you anymore money.

5. Don’t close inactive accounts.

Even if you don’t use some of your credit card it’s better to keep them open because just the action of closing accounts will drive down your credit score. Credit scores will be higher if you have credit cards with a low balance or no balance.

Having a good credit report comes from being responsible with money.

Tags: Credit bureau, Credit card, Credit history, Credit rating agency, Credit risk, Credit score

Category: Credit