Your personal credit report score largely determines the rates you can qualify for with most types of credit. The higher your score, the better rates you can get. To find your score, you can request it from a credit monitoring service or credit reporting agency. Most credit monitoring companies will provide it free with an introductory offer, but you will have to pay for it from a reporting agency. With hundreds of factors determining your credit score, there are many ways to improve it. The follow three are the quickest ways to boost your numbers. 1. Pay Off Short Term Debt The less debt you have, the better your score. Actually, creditors look at your debt to income ratio. They also rate debt differently. So credit cards are seen as more negative that college loans or a mortgage. Focus on paying off short term debt first, like credit cards. Paying off the other debt can come later. However, having credit cards and making regular payments is better than having no credit. 2. Spread Debt Around Not only do lenders look at your general debt load, they also consider specific accounts. Maxing out any account is seen negatively. It is better to spread that debt around to multiple accounts. Most advisors suggest having no more than 30% to 50% of a line of credit in use. Be hesitant to open a new credit card account though if you are planning to apply for a mortgage or car loan. Opening new accounts can also temporarily hurt your score. 3. Close Newer Accounts While you are looking at your credit report, consider closing some of your unused, newer accounts. The more credit you have available, the less new credit you can get - even if you aren't using it. However, the longer you have an account, the better your credit score. One way to get around this is to close accounts, then wait a couple of months to apply for a loan. This will give time for your credit score to jump back. There are no quick fixes to credit scores. Time and good credit habits are the surest ways of getting to good credit standing and low rates. |
