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[H1274]How To Increase My Credit Score

by Nathan Navachi, Nat

Especially when it comes to getting a mortgage, your credit score is one of the most important aspects of judging whether you have competency in money management matters, and whether you can get a low interest rate.

Revolving Debt and Credit Score

Revolving debt is one of the most important aspects of your credit score, and in order to consistently keep your credit rating as high as possible it is wise to fully understand this concept.

Credit agencies and banks have nearly full access to all of your credit history of borrowing money, since all major financial institutions will regularly report to the major credit agencies. To think that something will not show up on your credit report just because it is spread out over multiple credit cards is naive and it is not the way this industry works.

Revolving debt is the percentage of your total amount of credit across all credit cards and loans, relative to the amount of money that you still need to pay back currently.

For example, if you have five credit cards and a combined credit limit of $30,000, if you never used these credit cards or had them all completely paid off then your percentage of revolving debt would be 0%. This is seen as a good sign to banks and credit agencies, especially if you have been able to charge a lot of money and then pay it off fully and on time.

But if however you rack up $25,000 dollars worth of charges and make only the minimum payments for a year, your percentage of revolving debt would be close to 85%. For most banks and credit companies, any ratio of revolving debt that is above 30% is a signal that you may not be a trustworthy borrower, especially if this percentage has stayed high for a very long time.

The best way to keep your credit score high is to only make charges on your credit cards that you know you have the money to pay off right away. This way your percentage of revolving debt will stay as low as possible, and this combined with making your credit card payments on time will ensure that your score stays as high as possible.

Credit cards are often the first step for a consumer to build their credit score. When you make regular payments with a small credit limit, lenders will be more willing to lend you larger amounts. Before you jump out and open an account, make sure you don't have too many credit lines open or otherwise hurt your credit.

Pick A Good Card

Credit card companies offer several different types of credit cards for consumers. You can find student programs that require no co-signer or income. This is a great offer for your first card, but these cards also have higher rates.

You can also find cards with cash back rewards or other incentives. The trade-off are higher rates though. However, you can find no frill cards with low interest rates if you plan to carry a balance. Whichever credit card program you choose, make sure it fits with your financial goals.

Start Small

When you are building your credit score, you want to start small. Open one account and use it at least once a month to make a purchase. This can be a regular purchase that you have cash to pay for. The point is to use your credit and then repay it. Every time you make a payment, it will show up on your credit report.

Lenders will also look at how often you make payments. So using your card once a year and paying off the entire balance that month won't do you much good. Your credit report covers three years' worth of payment history, and lenders want to see your payment pattern.

Don't max out your card either. Only use a small portion of your credit to show lenders that you don't get yourself into financial binds.

Maintain Your Credit

Regular payments are only one part of your credit score. You also want to keep your credit in good order. If you have dozens of accounts open, close the ones you don't use. The less open credit you have, the more you will be eligible for, a bonus when buying a home or car.

Also be sure to take advantage of your annual free credit report. Look over it to make sure that your credit history is correct. If you find any discrepancies, resolve them with your lender.

Article Source : Pg. 28

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Both Nathan Navachi & Carrie Reeder are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Nathan Navachi has sinced written about articles on various topics from Mortgage, Debt Consolidation and Real Estate. Nathan Navachi is an expert in the industry and specializes in. Nathan Navachi's top article generates over 6600 views. to your Favourites.

Carrie Reeder has sinced written about articles on various topics from Finances, Mortgage and Finances. See my recommended online. Carrie Reeder is the owner of. Carrie Reeder's top article generates over 135000 views. to your Favourites.