Life happens and maybe your credit score has seen better days. If so it can hurt you when you need to borrow money. Maybe you get turned down or have to pay through the nose for financing.
The way the credit reporting bureaus calculate your credit score is a little complex.
But here are some things you should know if you’re trying to improve your score.
First, it’s actually not good to have no credit cards, or to cancel all your cards. I know, that seems backwards.
Conversely, don’t go opening a bunch of credit accounts you don’t need to try and raise your score. That’s just showing off. It won’t work.
What they want to see that you’re managing the accounts you have responsibly.
If you do have credit cards, keep the balance at less than 50% of the available balance. 30 percent is even better. It hurts your score if it’s above that.
Closing an account doesn’t make it go away. It can still show up on your credit report.
If you’re behind on any accounts, get current, and pay on time as long as you can. That will lift your score.
If you have an account that goes to collections, yeah that’s going to stay with you. For 7 years.
You can use technology to help with that. Put payment reminders on your phone. Better yet…. Set up automatic payments through online bill pay so it’s all automated.
And finally, don’t pay anyone to improve your credit score. They can’t. But you can, so when it’s time to apply for a loan, you’ll get a warm reception.
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