Tips For A Higher Credit Score

Derogatory factors on your credit report will lower your credit rating. Every time you miss a payment or are late for a credit card payment, your credit score takes a hit. If all else remains the same, your score will improve slowly over time. It takes a lot of effort, but a few tips can make a big difference in how high your credit score is by the time you need to borrow money again.

Never send payment after payday until your payday is really near. All finance companies, at some point in time will be willing to negotiate with you, and ignore their collection calls or letters. It’s in their best interest, so they will be more willing to work with you if they see you are making an effort. Paying on time will have a positive effect on your credit report, but if you can afford to pay through your savings rather than taking out a new loan, that’s an even better effect. Avoid penalties. You may be tempted to close a credit card before you pay the fee, but hold off on that for a few days, and let the card if you need a few months to save up the money. Maintain your credit cards if possible. For some credit cards, particularly rewards cards, having a large unpaid balance will start taking down credit score fairly quickly. If possible, keep the balance 50% below the limit. You should never cancel a credit card unless you absolutely can no longer use it, if it is still an option for you.

Keep your credit history clean. When you apply for a mortgage or a car loan, your credit history plays a big role in how favorably your application is received, and if you get approved, how interest rate you ultimately have to pay. One late payment on your mortgage can lower your interest rate by 2% or more, and can knock out as much as $100 off your monthly payment. A few points may not seem like much, but they do add up over time. Know what is in your credit report, and try to clean up any negative items or points. You will have to pay extra to have them removed, so be prepared to make at least that or wait a few months.

Pay off any revolving credit card debt before applying for a new one. Don’t keep your credit card balances open just because you know the balance is coming down. Those balances are still open. They will still accrue interest, and have it added to your available credit. Most of the time the interest on credit cards is a lot higher than the interest on car loans or mortgages.

Take a look at your credit report and see if you can lower your debts. You can lower your credit card minimum payments by paying off larger debts rather than retiring them quickly. For example, paying off larger balances than the minimum payment every month can seem like it is a way to pay more money to your credit card company every month, but in the long run it is the life saver you need to make every payment. Not only will you pay out less money deeper into debt, you will cut down on late fees and over-the-limit fees. Be sure it is realistic in your circumstances or you may find yourself deeper in debt.