You may not realize the importance of your credit score. Usually reality hits when you want to purchase your first home, buy a car on credit, or need some type of loan. Here are eight pointers for improving and managing your credit score.
Pay your bills
If you want to improve your credit score, pay your bills ahead of time. Do everything possible not to miss a payment. Creditors want to be assured that they will be paid.
Pay down your credit cards
Keep the balances of your credit cards below 50 percent of the maximum charges that the card allows. This indicates that you know how to handle your money. If your cards are over that amount, do whatever you can to generate more cash so you can pay them down to the amount they need to be.
Limit the number of credit cards you have
It is better to have one or two major cards than to have a bunch of cards for individual companies. If you owe bills to a number of different cards, your credit rating will go down. There is too great a chance that you will default on one or more of them.
Get negative accounts removed from your credit report
If you do a search, you will find that there are a number of companies offering to do this for you. However, they charge a lot of money. Simply write a letter to the collection agency and ask them for proof that the accounts are yours. If they have no proof, ask them to delete them from your credit file.
Don't close unused accounts
Just because you have an account that you no longer use, don't close it. Credit companies are interested in how long you have maintained good credit with different companies. Just keep it open, and use it for small charges now and then.
Check your credit report
Keep close tabs on your credit report, and make sure that the information is correct. You are entitled to one free report from the three credit agencies every year. If you find something amiss, contact the appropriate agency and have it corrected.
Be careful with new accounts
If you are just starting to build your credit, don't go out and apply for a bunch of new accounts right away. This immediately attracts negative attention from the credit agencies. Open one credit card, and use it for a good while before you open another.
Don't job hop and don't move a lot. Credit agencies are looking for permanence. If at all possible, continue to live in the same house, and only change jobs if it means a substantial pay increase.
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