Improve your credit score in 3 easy steps:
Pay on time
Even one late payment can have a devastating effect, especially if your credit is generally good. A late payment can lower your score by as much as 75 points. Creditors normally do not report late payments to credit bureaus until they’re 30 days overdue. But try not to be even one day late.
Reduce your debt
Conventional wisdom says to pay off the debts that carry the highest interest rates first. However, if your goal is to improve your score, focus instead on the account that is closest to its credit limit. Try to bring it down below 30 percent. Then, move on to the next account. Transferring all your debt to a single credit card is tempting, but that probably will not raise your score. Smaller balances on more cards are preferable.
Keep your accounts open
Remember that old accounts in good standing add points to your score. Closing accounts, even on cards you rarely use, usually hurts your credit score.
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- Your Credit Score. How to Fix, Improve, and Protect the 3-Digit Number that Shapes Your Financial Future. Liz Pulliam Weston
FT Prentice Hall, 2007. Pages: 224
- Photo by iStock