Better Understanding Your Credit: Part 3

How can I improve my credit score?

Now that you have a good understanding on what makes up your credit score, here are some tips on how to get it high and keep it up there.

1. Like I said in the previous post, don't apply for credit cards to just to get the free stuff. Not only do lots of inquiries hurt your credit, but so do lots of credit card accounts. Also, I've seen mortgage deals fall though because of people with too much potential credit card charging ability. (4 accounts of $5000 each, barely used) The lender wouldn't approve the deal because it would have been very easy for the borrowers to get into a scenario where they couldn't afford the mortgage.

2. This one's a no brain-er, but I'll say it anyway: Pay your bills on time people.

3. If somebody ever takes you to small claims court and wins, chances are that judgement will show up on your credit. It's better to take care of your debts before they ever get that far.

4. Same thing with collection agencies. If a bad debt ever makes it to a collection agency, that's bad. So when your credit card company starts calling, take care of it.

5. Keep your balances low on your credit cards.

6. If you have more than 2 credit cards, get rid of some. Remember, lots of accounts will damage your credit.

7. You're allowed one free credit report a year. Obtain a copy of your report and see what's on it. Sometimes, there will be errors.

8. Only apply for credit when you need it.

9. Store credit cards will show up on your credit report. You should probably avoid those all together.

10. The most important tip I can give you is this: just use your head. If you're conservative with debt, and pay your loans diligently every month, your score will be just fine.

If you'd like to comment on this entry, email me at nelson@2121.ca

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