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5 Ways to Improve Your Credit ScoreIf your credit score is dragging, there are many simple, yet often unknown, methods for raising it. Some people are completely unaware of the value of improved credit scores. Although the new VantageScore system provides an alternate scoring method for lenders to use, the important concepts are the same for all credit models. There are currently more variables in calculating credit scores than any of the three major reporting bureaus care to share. These companies, EquiFax, Trans Union and Experian, use a person's payment history, number of tradelines, or debts, balance on a debt versus total credit amount given, and other negative factors like bankruptcy, tax liens and trouble with the law to assign a number to every person in the country, who is of legal age. This is what is known as a credit score. A credit score might be in the 400 range, which is extremely poor, or it can go above 800, which is nearly perfect. Regardless of what your score is, it will follow you every where you ever go, and it will change monthly, which can be a good thing, if you follow the tips for increasing your score, outlined below. This is just a brief summary of how credit works. Whether your credit score is low or high, everyone can use a few more points on the positive side. Here are 5 keys to improve credit scores. Remember, if your score is low, it won't jump immediately. It usually takes two or three months to see any kind of change on a score, once you begin employing these tactics. 1. Never pay a debt late. This is the number one credit score killer. Remember, credit reports and credit scores are all about your ability to pay debts on time. Not only will your score drop the second you pay any bill late, potential lenders will become reluctant to help you when they see you aren’t paying all bills on time. 2. Pay your mortgage and car loans first. If you find yourself in a bind one month, and you can't meet all of your bills on time, make paying your mortgage and car loans your top priorities. Mortgages and auto loans usually count for more on your credit score than other debts because they are bigger debts, and in most cases you have them longer. Consequently, they demonstrate your ability to pay better than do things like your cell phone bill. You can always say you lost a cell phone bill, and lenders won't really care, but no one forgets to pay their home or car loans. Paying a mortgage on time will improve credit scores rapidly. 3. Get ONE new credit card, and use it. Most people are shocked at this advice. So many people say that credit cards are evil and are the biggest problem with bad credit. This can be true. If you have a credit card or several and all are maxed to the spending limit, this will hurt your score. So, get a card, spend a few hundred bucks, and pay off the balance the second you get the bill. Do this as often as possible. This is one of the best ways to improve scores. 4. Reduce the balance on any current credit or retail store cards. If you have a Sears card (something you really never need), and it has a limit of $500, and you owe $519, because you're being hit monthly with over-the-limit charges and you're paying the minimum, you are in a black hole that is devouring your credit score. Stop using the card, and pay it down as quickly as possible. High balance-to-limit trade lines are a real power drain on your credit score. 5. Consolidate credit card debt. If you do not have a credit card, use tip number 3. If you have four or five, though, look for a new card, offering a higher balance and pay off all of your other cards with the new one. Having numerous credit cards with balances makes you look like a high risk to lenders, and it makes improving credit difficult. So, combine credit cards with balances onto a single card or use equity in your house, if you have any. Establishing credit early and maintaining good credit are crucial if you ever plan to finance a car or buy a home. Following these keys, though, will make for a more comfortable ride. See Also: More Ways to Fix Bad Credit
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