How to Bump Up Your Credit Score

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A good credit score is a critical necessity for anyone seeking manageable terms on a mortgage loan, affordable payments on the financing of an automobile, or even low a APR on a credit card. Having a low credit score can translate into the lack of credit at worst and uncomfortably high interest rates at best. If your credit score is less than stellar, a few measures may help you bump it up and make life a bit less expensive.

Make payments on time every time. This step is obvious but true. Always make the payments on time. Pay online or by phone and use an online calendar if necessary, with reminders set for each bill due date.

Know the factors that make up your FICO score: Payment history, 35 percent; amounts owed, 30 percent; length of credit history, 15 percent; new credit, 10 percent; and types of credit used, 10 percent.

Apply for a secured credit card if you don't have a credit card. You will need a source that sends your payment history to the credit bureaus. Don't open up too many cards, though. You don't want to be overextended.

Request your credit report and credit score. These are usually two separate processes. Many online sites offer to send you a credit report for free. Create a spreadsheet and track your progress and watch your credit score rise.

Buy a house if you can if you don't already own one. It might be difficult to get a competitive rate relative to your credit rating, but there are a few options. FHA mortgage loans are not as punishing as far as interest rates go. You may have to work with a mortgage broker to secure the best rate. Making a regular, payment on a house every month will go a long way in bumping up your credit score.

Keep existing credit card accounts open. Closing credit card accounts may hurt your score. Make small purchases with the accounts, creating balances that you can easily pay off upon receipt of the statements so that you do not carry a balance forward.

Tips & Warnings

  • Be disciplined in paying the bills on a schedule. You'll be glad you did
  • Remember to pay your utility bills on time too. They sometimes report to the credit bureaus also
  • Live frugally and make sure you have money in an emergency fund so you don't have to charge and run up your credit when you need the money

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