Improving your Credit Score in 2010: Basic Action Plan
If you find yourself trying to improve you FICO score in 2010, you’re not alone. Many Americans are struggling to repair their damaged credit scores as the economy slowly continues to show signs of life.
But why is this so important? Why repair your credit score at all, especially in a time when the credit score needed for auto loans and even home loans seems to be loosening up? Maintaining a good credit score means opening up the full range of lending options available to you. People with good credit scores qualify for lower interest rates and more favorable lease terms whether buying a car, a house, or refinancing. Here are a few tips to help you increase your credit score:
Be Timely With Your Payments
Making your monthly bill payments on time is one of the easiest ways to improve your score. Payment history is, in fact, one of the most heavily considered factors when calculating your FICO score.
Keep Credit Cards/Keep Balances Low
Many people are tempted to close out credit accounts that have remained unused for a long period of time, but keeping the cards open and charging and paying off bits here and there will keep the card’s history alive and improve your debt-to-credit-ratio. Debt-to-credit-ratio is the amount of debt you have in total in comparison to the amount of credit your total accounts are approved for. This is a big factor when it comes to getting your credit approved by banks, credit unions, car lenders, buy here pay here financing dealers, and other lending institutions.
Avoid New Store Cards
10-15% off a purchase for opening a new credit account may be a tempting offer, but avoid the temptation to open new credit card accounts that you don’t need. Having too many accounts open may cause your score to go down.
Know Your Credit Score...and Your Report
Unfortunately, errors occur and identities get stolen, which can damage your credit at no fault of your own. But running credit reports on yourself often, will give you a good picture of what lenders are seeing and allow you to dispute anything out of the ordinary. Since pulling your own credit report is a "soft inquiry," it will not hurt your credit score. You can get an annual credit report for free from AnnualCreditReport.com, but getting your score costs extra. To get your credit score for free, try a 30-day Free Trial from CreditReport.com.
Some banks even offer patrons free monthly FICO score reports; it doesn’t hurt to ask your bank if this is available to you.
