Boosting your credit rating
Written by Miranda Marquit Reprinted from www.hubpages.com
Your credit score, or FICO score, is an important part of your personal finance situation. Knowing your credit rating is only part of the battle, though. Once you know where you stand, you need to know how to boost your score. A 620 is considered high risk, so it is important to try and keep your credit score near 700 or above. Here are some things you can do to boost your score:
- Pay your bills on time. Not only is making credit card payments on time important, but paying your other bills on time is also necessary. If you are late too often, your utility company may report you to the credit bureaus. Also, late medical bills and other obligations can result in a lower score.
- Make at least the required minimum payment. Pay the required minimum each time. Sometimes if you do not pay the minimum, it still counts as a late payment, even if you have paid some of the amount.
- If you can’t make a payment, contact your creditors. Usually they will help you out a little bit, or at least set a schedule you can meet. And, if you pay according to the new agreement, many creditors will forebear reporting you.
- Pay down the credit card debt. Many credit card companies report your limit to the credit bureaus. The farther your balance is away from the limit, the better your credit score.
- Try to keep debt level low. Part of your FICO score is your income-to-debt ratio. So, if a large portion of your income goes to making debt payments, or if you have a lot of debt for what you make, then it can negatively impact your credit rating.
- Avoid requesting new credit multiple times in a six month period. If you make numerous requests for credit, whether at the department store, applying for a credit card, getting a loan or signing up for satellite TV, it shows in your credit report. Many requests (more than 2 or 3 in a six month period) can damage your FICO score.
It will take a few months for your credit score to start moving upward. And things like canceling a credit card, or applying for a new credit card, can halt your progress. So, if you are trying to improve your FICO score, hold off for a while on canceling a credit card, or applying for a new line of credit.