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Keep Your Credit Score on Track with These 5 Tips

Posted on 2015-09-03 16:05:00

Friends with thumbs upAlthough there are many credit scoring models in use today, all are designed to quickly and objectively predict your creditworthiness. These 5 tips can help you keep your credit score on track. #1 Pay your bills on time, every time. Why it matters: More than anything else, lenders want to know how you pay your bills. So, your payment history usually carries the most weight with any scoring model. While a single late payment may have little impact on your credit score, a trend of late payments will not go unnoticed. Delinquent accounts and bankruptcies can cause your credit score to drop significantly.

See if your 2015 credit score is on track.
#2 Keep credit card balances below 20%. Why it matters: How much you owe is another factor that typically carries a lot of weight with most scoring models. Creditors are interested in how much credit you have already committed to, especially in relation to your credit limits. If you are near or over your credit limits, prospective lenders may be hesitant to issue more credit. Even if you pay your bills in full each month, your credit score may factor in a large balance that you have not yet paid. If you have a high balance, considering paying the balance down before the statement closing date. #3 Don’t close old credit card accounts without good reason. Why it matters: A longer credit history is viewed favorably by lenders. For that reason, it is rarely a good idea to close old accounts, even if you aren’t using them. Closing an account can also lower your available credit, and that can raise the percentage of available credit you are using. #4 Don’t apply for credit you don’t need. Why it matters: Most credit scoring models factor in applications for new credit by looking at “hard inquiries” on your report – those that result from an application you initiate. Unless they are excessive, inquiries usually have a minimal impact on your credit score, but too many can cause a significant credit score ding. New accounts will also lower the average age of all of your accounts which could negatively affect your credit score. #5 Know what your credit report says about you. Why it matters: Credit report mistakes are common. Your credit score is calculated based on the information in your credit report. You are the only one who will know if the information on your credit report is accurate. Review your credit report periodically, and consider a credit monitoring service that will alert you whenever there are significant changes to your credit report.
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