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11 Ways to Improve Your Credit

A good credit score has short and long term implications that can help make important investments and purchases possible and ensure that credit is available when needed. The Federal Reserve and all major credit reporting institutions offer information and advice about improving credit scores. Follow the strategies below to improve your credit score.

1. Procure a Credit Report and Follow Through – The way to begin to building and improving your credit score is to obtain a free copy of your credit report and check all the details, identifying any irregularities or inaccurate information. Be sure to address and correct each of these errors. Be prepared to spend time. Even though you are right, it may not be as easy as you think to correct credit card errors, some of which might be obvious.

2. Timely Payments – Take responsibility for your obligations and be systematic, consistent and timely when paying your bills. If possible, establish payments from your bank that ensure your timeliness. Next, be sure there is adequate money in the account to make the payments. Sometimes, that may mean making the timely payment of your obligations more important than purchasing new items.

3. Understand how your credit score is determined – By understanding how your credit score is compiled, you are better equipped to improve your credit score. Note the following items that impact everyone’s credit score:

4. Timeliness of payments – Late pays or no pays show up on your credit report and will reduce your credit score.

5. The amount of your outstanding debt – Most credit scoring models consider the amount of outstanding debt verses the amount of credit. When your outstanding debt nears your credit limit, your credit score can suffer.

6. Length of credit history – Short credit histories do not score as well as long credit scores. If you have a short credit history, the best way to improve your credit score is to make timely payments and keep balances low.

7. Control new applications for credit – If your applications for new credit are excessive, your credit score will suffer. The rule of thumb should be to only apply for additional credit if you can afford it and have demonstrated you can manage the credit you already have.

8. Choose credit accounts wisely – Many credit scoring models weigh the number of credit accounts you may have. These models may also review the type credit you have. An abundance of similar credit accounts and a large number of accounts may lower your credit score.

9. Know your rights – If you are going to improve your credit score, you must know your rights, how to make correction and what actions you can take to right inaccuracies. The Federal Trade Commission offers guidance for disputing credit errors on credit reports.

10. Pay rather than shift debt – It is better to pay old debt rather than shift your obligations to other sources of credit. It is better for your credit score to keep unused credit cards open than it is to close them, which is a short-term solution that can backfire.

11. Stay informed – Your credit has long-term implications. In order to defend yourself and improve your credit score, you must follow new related to credit-repair scams and other miracle cures. The only remedy for improving your credit score is to follow the steps above and spend the time to follow through.

Remember that it takes time to improve your credit score. Stay informed, be consistent and pursue this goal with a determined effort.