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Improve Your Credit Score and
Develop a Solid Credit History |
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The first thing to remember is that your credit score can
vary from month to month-even day to day, sometimes. This is
because it is calculated based on the credit data available
for you at the credit bureau on the day the score is
requested by a lender.
But there are some specific ways to improve your credit
score. First, when a lender receives your
credit score, it includes "score reason codes" to explain
the top reasons your score was not higher. These codes can
give you an idea of how you should start improving your
score, such as closing unused credit accounts or being more
diligent about making payments on time.
Additionally, here are some general suggestions to help you
develop a solid credit history and influence your score for
the better:
• Pay your bills consistently and on time. And take
heart-the scoring models all take into account the fact that
everyone misses a payment once in a while. Also, negative
information loses its potency over time: a recent late
payment is weighted more heavily than a late payment four
years ago.
• Check your credit report and remove any errors. By making
sure that only your accurate credit history appears on your
report, you ensure that the credit score it generates isn't
lowered by inaccurate information.
• Keep your debt reasonable. One rule of thumb: for a good
credit score, your account balances should be below 75% of
your available credit. For example, if you have a $2000
credit limit, you should have a balance of no more than
$1500.
• Maintain only a reasonable amount of unused credit. While
it's good to have a cushion of credit available, having
ready access to thousands of dollars of debt makes you a
poorer
credit risk.
• Avoid too many inquiries. Inquiries are interpreted as a
sign that you have been actively seeking credit, and may be
in financial difficulties or in the process of overextending
yourself.
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