Your credit score can be one of the most important numbers in your life if you want to buy something using a payment plan. Improving your credit score will give you access to loans at a lower interest rate, may lower your insurance rate and can increase your ability to borrow money. The three credit reporting agencies -- Experian, TransUnion and Equifax -- compile credit scores based on what is in a consumer's credit report, and their scores reflect the amount of risk to the creditor that the borrower will not pay back the loan.
Remove and Prevent Negative Items
Removing negative items from reports will increase scores. Negative items, such as late or missed payments, not paying the full amount due and repossessions, will lower a credit score. Negative information will be removed from a report in time -- seven years for a late payment -- but the credit bureau will remove erroneous information if you prove a disputed item. Negative items lose their impact over time but affect your score until they drop off your report.
Lower Outstanding Debt
Lowering the amount you owe on debt accounts will add points to a score. The credit bureaus look at the amount of credit a consumer has available compared to how much he owes on those accounts and whether he is reaching his balance limits. Lower balances reflect a cautious use of credit and can raise your score. The amount of debt you have compared to available credit makes up a good part of your credit score -- about 30 percent of your score reflects your credit utilization. To add points to your credit score, use your credit cards less frequently and make more than the required payment to lower the balances.
Long Credit History
Credit bureaus look at how long you have had credit when determining your credit score. The longer a person has had good credit, the lower the risk that the person will quit paying her bills. The amount of time that you have maintained accounts can make up 15 percent of your score.
Lower the Frequency of Asking for Credit
The more credit you apply for, the lower your score. Credit bureaus assume that if you are applying for many different lines of credit you need access to money, which could make you a credit risk. New credit inquiries will remain on your report for two years and new accounts can comprise up to 10 percent of your score.
Pay on Time
Consistent timely payments are mandatory to add points to a credit score. Paying your bills every month shows the credit bureaus that you are not over-extended and able to meet your current obligations. Your payment history can attribute as much as 35 percent of your score, which makes paying on time a key path to a high score. If the payment falls at a difficult time of the month, your account provider may be able to change the date.
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