Tips on How to know a Low Credit Score
Copyright (c) 2010 Suzy Vanstrusen
These are the steps you should take if you want to build up your credit and credit score
What are the steps you should take if you want to build up your credit and credit score? Here are some valuable tips that can help you add points to your credit score within the next few months:
Timely Payments
Many consumers tend to forget paying their credit card bills or their monthly loans exactly on their due dates. Did you know that the timeliness of your payments make up about 30% of your total credit score. Can you imagine how a few late payments or even just one late payment can lower your credit score? If you have the tendency to do so, it's about time to make drastic changes in your payment habits.
One way to avoid delays in your payments is by setting up an automatic payment system with your bank or a credit union. This means, each month, your payment will be automatically deducted from your savings so you can be assured that all your creditors will be receiving your payment on or before your scheduled payment due. At least six months of consecutive on-time payments will significantly boost your credit score.
But what if emergencies arise or you may be experiencing unexpected financial trouble? How can you avoid incurring late payments in your credit report? In such situations, the best thing to do is contact your creditor and try to work out a repayment plan. Request that your payments not be reported as late if you can submit them within the period extended to you by your creditor. Most creditors would agree to this set-up especially if you explain the weight of your situation.
Keeping old accounts
The length of your credit history occupies a valuable percentage in your credit score. Some people that are stuck in credit card debts choose to close their old credit card accounts especially the ones with high rates. However, this is a BIG mistake. Such a move can only do more damage than good to your credit score.
Although you should stop using your high-rate credit cards, this doesn't mean you have to cancel them especially if they have been with you for a long time. Closing out your oldest credit card accounts will be like deleting a part of your credit history. Instead of cancelling these unused cards, use them once in awhile to make a small purchase just to prevent them from automatically closing. After you've used that old credit card for a small purchase, pay it off right away to avoid incurring the high interest rate.
Setting your credit limit free
How much of your credit limit you use also affects your credit score. Ideally, you should not go beyond 40% of you allowable credit limit. With this in mind, be careful about using your low interest credit card in charging all your expenses as this can lead to a maximized use of your credit limit. To keep much of your credit limit free, you should pay close attention to where and how you spend your available credit.
These are the steps you should take if you want to build up your credit and credit score
What are the steps you should take if you want to build up your credit and credit score? Here are some valuable tips that can help you add points to your credit score within the next few months:
Timely Payments
Many consumers tend to forget paying their credit card bills or their monthly loans exactly on their due dates. Did you know that the timeliness of your payments make up about 30% of your total credit score. Can you imagine how a few late payments or even just one late payment can lower your credit score? If you have the tendency to do so, it's about time to make drastic changes in your payment habits.
One way to avoid delays in your payments is by setting up an automatic payment system with your bank or a credit union. This means, each month, your payment will be automatically deducted from your savings so you can be assured that all your creditors will be receiving your payment on or before your scheduled payment due. At least six months of consecutive on-time payments will significantly boost your credit score.
But what if emergencies arise or you may be experiencing unexpected financial trouble? How can you avoid incurring late payments in your credit report? In such situations, the best thing to do is contact your creditor and try to work out a repayment plan. Request that your payments not be reported as late if you can submit them within the period extended to you by your creditor. Most creditors would agree to this set-up especially if you explain the weight of your situation.
Keeping old accounts
The length of your credit history occupies a valuable percentage in your credit score. Some people that are stuck in credit card debts choose to close their old credit card accounts especially the ones with high rates. However, this is a BIG mistake. Such a move can only do more damage than good to your credit score.
Although you should stop using your high-rate credit cards, this doesn't mean you have to cancel them especially if they have been with you for a long time. Closing out your oldest credit card accounts will be like deleting a part of your credit history. Instead of cancelling these unused cards, use them once in awhile to make a small purchase just to prevent them from automatically closing. After you've used that old credit card for a small purchase, pay it off right away to avoid incurring the high interest rate.
Setting your credit limit free
How much of your credit limit you use also affects your credit score. Ideally, you should not go beyond 40% of you allowable credit limit. With this in mind, be careful about using your low interest credit card in charging all your expenses as this can lead to a maximized use of your credit limit. To keep much of your credit limit free, you should pay close attention to where and how you spend your available credit.
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