7 Critical Ways to Improve Your Credit Score

7 Critical Ways to Improve Your Credit Score

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College students and credit considerations.

A low credit score can effect you in ways beyond the interest rates you pay for your loans. Bad credit can keep you from leasing an apartment and may even stop you from getting a job. It is imperative that you rebuild your credit by incorporating the following seven critical ways to achieve a higher score.

1. Pay your bills on time. If you are late paying your bills and your creditors notify the credit reporting bureaus that you are late, your credit will take a hit. Always strive to pay your bills on time. Set up reminders from your creditors to pay your bills at least 10 days before they are due.

2. Pay off your credit cards. Pay offer your credit card balances or at least reduce your credit accounts to manageable levels. Your credit score will increase as you lower the percentage of your debt.

3. Open new credit accounts only when needed. Never open new credit accounts until you absolutely need them. Every inquiry on your personal credit will result in a slight drop in your credit score. Even if you don’t use your new credit, those open credit lines can work against you.

4. Reduce your debt. Not all debt is bad and some debt, including mortgages, can benefit you in other ways such as providing a tax deduction. All debt, however, is money that must be paid back and usually at interest rates that are high.
The more outstanding debt on your books, the lower your credit score.

5. Check your credit reports. Everything about the way you manage your credit appears to be sound, but why is your credit score so low? It could be that there are aged accounts that have not been updated on your credit report or even accounts ascribed to you that shouldn’t be included. You should obtain copies of your credit reports from Experian, Equifax and TransUnion, the three credit reporting bureaus, to confirm that the information about you is current and correct. If you find problems, then notify the respective credit bureau. Corrections are typically handled within 30 days.

6. Protect your personal information. Never share your Social Security Number with anyone other than with people that have a valid reason to know it (e.g. creditors, the IRS and employer). Many Americans fall prey to identify thieves, people that may take your personal information and open accounts in your name. That information eventually finds its way to your credit reports and will also lower your score. Beyond that, it can take many months to correct the damage.

7. Give it time. Beware of promises from some that they can improve your credit score immediately. It takes time to raise your score, but improvements can be noted in as little as 30 days. A more extensive increase may kick in four to six months later with very bad credit taking a year or longer to repair.

Credit Considerations

Consumers struggling to manage their credit should consult a credit counselor for assistance. Many counties provide this service while nonprofit agencies are also available. Deal only with a counselor who provides references and has a proven track record of helping beleaguered consumers.

See AlsoAre Credit Cards a Trap for College Students?

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Categories: Personal Advice