How to polish your credit score

Credit score… How amazing, that some numbers can almost rule our lives. We need it to be in a tip-top shape to buy a car or a house; and long gone are the days when to rent a place all that one needed was to be employed or have some money in the bank. Car insurance rate is affected by the condition of our credit score as well.

What is this “magical” number that everybody depends on? It is based on our credit report information and represents our creditworthiness. For example, lenders use it to see how likely a borrower is to repay a loan. If the credit score is not as high, you may not be qualified for the best rate.

What affects credit history? The most important areas are: payment history (negative public records and collections; accounts that are paid as agreed; delinquent accounts), what you owe (how much you owe on accounts, installment loans and so on), length of your credit history (when your accounts were opened; when there was last activity), types of credit (mortgage, loans), and new credit (newly opened accounts, recent credit inquires).

Now, do not get discouraged, if your credit score is not where you want it to be. There won’t be an overnight miracle of transformation, but there are some things you can do that will help bring that number of yours way up in a matter of a few months.

Here is what to do:

pay your bills on time. Have you met your computer? Set up an auto-pay or use online payments through your bank (save on stamps and time bonus!);

try to negotiate the payment arrangement with your creditors if you know you might be late on bills;

pay off debt or at least keep it low. Have the balances down to about 30% (or less if you can manage) of your available limits;

zero balance accounts may be of help to the credit score, so do not close them;

do not close your old accounts;

open a few new accounts in case of the past credit problems and manage them wisely;

get the higher credit limits and do not max them out;

try to minimize number of credit inquires within a short period of time.

Avoid bankruptcies and collections, which, unfortunately, will stay on your credit report for 7 to 10 years. Make sure to keep up the good habits in order to really polish that wonderful number of yours.

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How to polish your credit score