How to improve my creit score?
creit scoring models are complex and often vary among creitors and for different types of creit. If one factor changes, your score may change -- but improvement generally depends on how that factor relates to other factors considered by the model. Only the creitor can explain what might improve your score under the particular model used to evaluate your creit application.
Nevertheless, scoring models generally evaluate the following types of information in your creit report:
* Have you paid your bills on time? Payment history typically is a significant factor. It is likely that your score will be affected negatively if you have paid bills late, had an account referred to collections, or declared bankruptcy, if that history is reflected on your creit report.
* What is your outstanding debt? Many scoring models evaluate the amount of debt you have compared to your creit limits. If the amount you owe is close to your creit limit, that is likely to have a negative effect on your score.
* How long is your creit history? Generally, models consider the length of your creit track record. An insufficient creit history may have an effect on your score, but that can be offset by other factors, such as timely payments and low balances.
* Have you applied for new creit recently? Many scoring models consider whether you have applied for creit recently by looking at "inquiries" on your creit report when you apply for creit. If you have applied for too many new accounts recently, that may negatively affect your score. However, not all inquiries are counted. Inquiries by creitors who are monitoring your account or looking at creit reports to make "prescreened" creit offers are not counted.
* How many and what types of creit accounts do you have? Although it is generally good to have established creit accounts, too many creit card accounts may have a negative effect on your score. In addition, many models consider the type of creit accounts you have. For example, under some scoring models, loans from finance companies may negatively affect your creit score.
Scoring models may be based on more than just information in your creit report. For example, the model may consider information from your creit application as well: your job or occupation, length of employment, or whether you own a home.
To improve your creit score under most models, you should
* Correct mistakes on your creit report. Many inaccuracies on a creit report can be the result of simple human error, and are therefore are not difficult to dispute. Of course, if you don't order your creit report, you might never know about it. Whether the inaccuracies relate to payments not creited, late payments, or data mixed in from the creit file of someone else with a name similar to yours, you will want to contact the creit bureau to dispute inaccurate information promptly.
* Concentrate on paying your bills on time. This is especially important when it is close to the time to apply for a loan.
* Paying down outstanding balances. It is recommended that you keep your balances at or below 25% of your creit card limit.
* Not taking on new debt, do not move your debt around. High ratio of your creit card balance to your creit limit will lower your creit score, so you should not close out an account and transferring the balance to another creit card.
* Do not open or close creit card accounts near loan time. Closing accounts will increase your balance-to-limit ratio. Opening new accounts is also not recommended.
* Choose your creit cards wisely, only apply if you will use it. Do not apply one just because you like the look of the card.
