Improve Your Credit Score
Few people understand how important a credit score is, and even less realize the many different aspects of life that it can affect. Credit ratings are used not only by lenders reviewing loan applications, but also by utility and insurance companies to determine rates and deposit requirements. A poor credit score can even limit job prospects and cause other troubles beyond imagination. No matter what an individual's rating is, it can always be better and everyone should strive to maintain the best score possible. It is important to note that negative impacts to credit don't typically occur overnight, and it will require both time and effort to fix and tweak several things.
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The first step is to obtain a copy of a credit report from one of the three major bureaus. Each line should be reviewed very carefully for any errors, omissions, or old data. Address and employment information may be incorrect, but neither of these categories have any effect on the credit score itself. However, misinformation regarding accounts, collections, or judgments can absolutely ruin an otherwise decent rating. If there are any items that are not being reported correctly, they must be disputed with each of the credit bureaus. All three organizations allow disputes to be made online, or they can be contacted by phone as well.
Once all errors have been removed from the credit report, more time can be focused on learning behaviors that will improve your credit score both short term and in the long run. A major component of the credit score is the percentage of credit used. If there are multiple revolving accounts, every effort should be made to keep them under 50% used. If any credit cards are maxed out, balances should be rearranged or paid down and the credit score will increase as a result. It will not rise overnight, but within a couple months the rating will reflect the improvement.
Another major factor in the determination of a credit rating is the age and type of accounts present on an individual's report. Closing older accounts should be avoided when possible, because this will result in a shortening of the average length of time open. It is also important to have both revolving and installment accounts, as revolving accounts do not typically display a pay history that can be used for trending. All installment accounts should be paid promptly, as late payments can seriously damage a credit score.
Although it is not easy to improve your credit score, it is certainly not impossible. It takes some conscious effort, but the long term benefits are absolutely worth it. After all, few things in life affect as much as your credit score.
