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Step 1
When attempting to increase your scores, the first and foremost thing that a person needs to do is subscribe to a credit monitoring service. Most major lenders have their own and the range in price from $2.95 a month to $29.95 a month. Once you have done that, it is time to break down your report. There are several factors that come into play here. Most people think that they can do this overnight, but I am here to tell you this will take an effort and will take some time.
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Step 2
For me, the most important part of your credit is the length that you have established it. In some cases, reestablished credit is the date that you got out of bankruptcy and/or foreclosure/repossession. This date is significant to the score as it shows a time pattern as to how long you have been able to manage your credit. Most companies want to see a 6 month to 12 month history and scores seem to carry the most impact after a one year history of on time payments.
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Step 3
As mentioned in the above step, on time payments are key to a great score. If you miss a payment and it reflects on your bureau, it can be damaging to your score. Make sure that you budget yourself so that you can make each and every payment on time. Missing a mortgage payment will carry more weight to it than missing a revolving line. Also, make sure that you keep away for acquiring NSF charges as these can/will show up on your report and it will not be healthy. Other things to avoid is acquiring collections. If at all possible, work it out with the original creditor and get it paid off through them. Having items show in the collections field or the public records field will impact your scores also.
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Step 4
Another major factor is applying for loans. I have seen way to many customers continually apply for a loan over and over and over until they can get the one that they want. I recommend that you apply once and only once unless you are doing it in a 2 week period. If you do this in a 2 week period to the same type of lenders, it is acceptable. However, if you do it for a 3 month period to the same type lenders, you are going to damage your scores and drive them down.
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Step 5
Another key element is that you want to have more available credit than you have charged. In the case of credit cards, you want to keep your balance at no more that 33% of the available line. It is a benefit to have between 2 to 4 cards and if you have any more than that, keep them clean. Once paid off, never close a revolving account. A great rule of thumb is never charge more than you can pay off in a given month. Just because it is there does not mean that you have to spend it. As for installment loans, you want to make sure that you always have at least 1 installment loan open at all times. The amount is not the concern as much as the length and the payment history. Also, do not include a mortgage as one of these. It needs to be separate.
Comments
Steveo52 said
on 5/2/2009 You hit this one right on the head, so many people don't understand the scoring system. But this article really helps clarify the topic.
Elizabethknows said
on 4/24/2009 very true tips about making that score better. 5*
Danniboi33 said
on 8/8/2008 TVDinner, I would have to agree with that assessment.
TVDinner said
on 8/7/2008 Good info. I think another mistake is that people close credit cards or department store cards after paying them off. Almost all financial experts will tell you to keep them open to estabish the longevity of credit you mentioned in your article. good info!
TVDinner
Blog at http://www.PoliticalDisgust.com
chrisfisher said
on 6/17/2008 A great rule of thumb is never charge more than you can pay off in a given month. Just because it is there does not mean that you have to spend it.
Those are the words I am living by from now on. Thanks for the information.