Simple credit score tips can make your New Year brighter
Image Source: MorgueFile.com
Your credit score is important to so many aspects of your life. It can be the difference between getting a job you want or being passed over. Your FICO score determines whether you can get a mortgage or auto loan and how much you’ll pay in interest for the debt. It can also affect the rates you pay for auto and homeowner’s insurance, cell service or utilities. To keep your score as high as possible, check out these five simple ways to up your credit score.
#1 Keep your credit card balances low
The best case is not to carry balances month to month on your credit cards. This way, you’ll avoid paying interest charges. However, if you have to carry over balances, your credit score will best benefit if you utilize no more than a total of 30% of your credit limit month to month. This is on a total available credit basis. For instance, if you have 10 cards with a total $12,000 limit, you should never carry more than $3,600 month to month to avoid a hit to your credit score for over-utilization.
#2 Limit which cards you use
This is a matter of tracking, but the more cards you have, usually the better your credit will be, so long as you are not carrying more than 30% total. But what’s also important is how many of your cards you use. You generally have to use a card once or twice a year to keep it in good standing, so that’s something to bear in mind. But you can drag your score down if you have balances on several cards, even if the total is low, it can hurt your credit. Limit the number of cards that carry balances.
#3 Debt age is important
The older the debt on your report, generally the better. The FICO score calculates an average age of your credit lines. The longer your accounts are open, the better. Don’t close an older account because you got a newer card. Leave that older account open and only use it once or twice a year – enough to keep it open and in good standing. Also, limit the amount of new cards you get all at once. If you get five new accounts at once, your FICO score will take a dip because it drops your average credit age.
#4 Pay your bills on time
On-time payment of your bills is critical to keeping your credit score as high as possible. Even bills that don’t regularly report to credit agencies may report you if you get behind and the account goes into collections. And for those accounts that do report to credit agencies, it’s critical that you pay on time, every month. A good track record will also be important when you go to apply for a mortgage or auto loan.
#5 Limit inquiries
When you apply for new credit, and the creditor examines your credit report, it’s called an inquiry. Inquiries can lower your credit score and stay on your credit report for months. This can then mess up your odds of getting the most competitive rate. If you plan to comparison shop multiple lenders, the best approach may be to let all the creditors you’re considering run your credit report within a day or two so that all will fall off at the same time.
With the New Year starting today, now is the time to get your credit score on the right track and as high as possible. If you’re overwhelmed with debt, though, your credit score may suffer. If you’re living paycheck to paycheck, are being harassed by creditors and are behind on your bills, your credit score may be the least of your worries. To ditch your debt and start rebuilding your credit score, consider a fresh financial start with North Carolina bankruptcy.
Contact the Law Offices of John T. Orcutt today for a free North Carolina bankruptcy consultation. Call +1-919-646-2654 for a free consultation at one of our offices in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.