We recently covered how your credit score is determined and how this affects your ability to receive a home mortgage (See How is My Credit Score Determined?). Since we now know the basics, lets see how to improve your FICO credit score. Myfico.com gives potential home buyers great tips to improve their score and here are some ways to raise your score based on factors that go into your FICO credit score.
- Make sure to make credit payments on time.
- If you have been late on payments in the past, get up-to-date and stay current.
- Contact your creditors if you are having trouble making your payments or see a legitimate credit counselor that can help you with budgeting.
- Do not use your credit lines at the maximum amount. Keep your balances low.
- Do not close credit accounts that you do not use just to raise your score.
- Do not open a new credit account just to raise your score and increase available credit.
Length of Credit History
- Watch opening too many credit accounts to fast.
- Length of credit history is mainly evaluated if you do not have much other credit information. If you are a new borrower, rapidly opening credit account will appear risky.
- If you are considering closing a credit account, choose the one that you have made payments on the longest.
- Shop for rates only within a certain period of time.
- Show your ability to open a credit account and make responsible payments.
- Check your credit report.
Types of Credit Use
- Open credit accounts only when they are needed.
- Having a credit card and installment loan will raise your score if you make timely payments.
- Just because you close a credit account does not mean that it will be removed from your credit report.
The more you know about managing your credit, the better. Remember that negative information will stay on your credit report for 7 years and cases of bankruptcy will stay on there for 10 years. Time and making responsible payments will be the two main ways to improve your credit. Learn more about improving your credit score by visiting Myfico.com.
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