If your credit score is above 720, you are likely to be offered
the best interest rates when applying for a car loan, a mortgage
or a personal loan.
Your mail box will be filled with credit card offers trying to
entice you with, not only the best rates, but also lots of perks
and extras. Most Americans have credit scores below 720,
so some of those good deals are not available to them.
Bumping up your score by just about 100 points can save a few
thousand dollars in interest on a car loan, and several hundred
dollars a month on a home loan. Several hundred dollars a month
for thirty years is a lot of money, especially if it is invested.
Six laws of improving credit score.
1. Pay your bills on time!
If you do not pay your bills on time your score will never be
good. Late and missed payments are reflected on your credit report
and have serious negative impacts on your scoring. This is especially
important if you are planning to apply for a loan in the near
future. Just one late payment in the last 6 or 12 months can damage
2. Reduce your credit card debt.
Try to bring your credit card debt to the level of 25% (or less)
of your credit limits. The ratio of available credit to the credit
you are using is one of the key factors affecting your
3. Don’t close revolving accounts that you are not using.
In regards to any revolving credit accounts you might have,
including credit cards, accounts with department stores, or even
gas cards; it is never a good idea to close them just because
you are not using them. The more positive information in your
credit file, the better your credit score will be.
4. Don’t apply for credit too often.
Applying for loans with several different banks during a short
period of time (14 days or less) will count as one inquiry. However,
if you seek new credit every month or every two months, it will
definitely reflect negatively, lowering your overall score.
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5. Correct any mistakes on your credit reports.
Incorrect information on your credit
report is not unusual, so it is best to periodically review your
own credit reports and correct any mistakes. Each credit reporting
agency has its own rules regarding challenging the incorrect information.
While it might seem like a daunting task, it will be well worth
Note that correcting mistakes takes, on average, one to
See also: reporting
agencies, what is a credit
credit report, calculating