Credit is important. Without it, you couldn't get an auto or mortgage loan. In addition to establishing credit, it's also vital for consumers to maintain a good FICO score. Nowadays, many entities, such as insurance companies and employers, check an applicant's credit score. Those with a high FICO score receive prime consideration. Fortunately, there are ways to improve a low score. And in many cases, a credit card can help boost a low score.
Instructions
- 1
Apply for at least two credit cards. Having one credit account isn't enough to improve a low credit score. Potential creditors prefer applicants with multiple lines of credit. This can include a credit card, auto loan, installment loan or line of credit.
2In order to improve your FICO score, you have to use the credit card. Acquiring a new credit card and storing the card in a safe doesn't help your personal score. Credit cards are useful. However, the key is using them responsibly.
3Submit credit card payments early. Paying credit card bills on time is the number one way to improve a low FICO score. However, unexpected situations can arise in which late payments are inevitable. The credit cards online payment system can have a glitch, or you may forget to mail a payment. One late payment can reduce your score by 10 points. Rather than waiting until the last minute, resolve to pay credit card bills a few days before the due date. You may also consider automated bill pay.
4Pay off the balance every month. Even if you can't pay off the credit card every month, attempt to pay off the balance every two to three months. This keeps your debt low, and it shows a measure of self-control. Maintaining a low debt-to-income ratio and paying off credit cards adds points to your FICO score.
5Keep the account open. Closing a credit card account shortens your credit history and overall available balance. Both factors play a significant role in credit scoring, and this seemingly simple maneuver reduces your FICO score.
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