Your credit score determines whether you are eligible to receive credit, how much credit you can get and what interest rate you will pay. Credit scores are also used in determining approval for apartment leases. With all these financial determinations made based on your credit score, it is important that you know what you can do to boost it.
Make Regular and Timely Payments
Making sure payments are made on time is the most important factor in determining your credit worthiness. Late payments, defaults and bankruptcy negatively impact your credit score. If you have black marks on your payment history, it could take some time to repair the damage. Continue to make timely payments and at least meet the minimum payment required by your lender or credit card company. If you cannot meet the minimum payment --- at least make some portion of the payment and get caught up as soon as possible.
Reduce Account Balances
The amount of total debt you have is an indicator of whether you will be able to repay obligations. If you carry a large amount of debt and have high revolving credit balances in relation to credit limits, this has an adverse effect on your credit score. Make a budget plan to reduce the total amount of outstanding debts by paying more than the minimum payment required each month, and spending less using your credit cards.
Reduce the Number of Open Accounts
Even if you have a large number of open revolving credit accounts without large balances, this could slightly impact your score. Close some of your revolving credit cards as soon as possible. This can easily be done by transferring balances to other credit cards. Once balances are transferred from the card, close the account permanently. When employing this strategy it is best to close the newest accounts, as closing the older and more established accounts might have a negative effect on your credit score.
Remove Inaccuracies From Your Credit Report
Check your credit report at least once a year for inaccuracies. You may request a free copy of your credit report from the three major credit reporting agencies---Equifax, Experian and TransUnion---once per year. This free report is mandated by the federal law. You can also get a free copy of your credit report if you have been denied credit by a lender or creditor. If there is erroneous information contained in any of the reports, this could have an adverse impact on your credit score.
Consolidate Debt
If you have equity in a home, a home equity line of credit can be established to consolidate all debts. This step can reduce the number of open credit lines and move balances to an account where the interest rate is likely lower. Before taking this step, you should consider how much your monthly debt payment can be reduced and how much interest will be saved over the life of the loans. With this information, a budget should be established to pay off the home equity line. After this step is taken, it is important to close all other open accounts. This solution may not be available to an individual who already has a lower credit score.
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