Five Ways to improve your credit.

Hello,

I was reading an article in USA Today entitled, “As lenders clamp down, credit scores take a hit.” The story basically illustrated how lenders are closing credit card accounts and lowering credit limits for millions of consumers and business owners who have never paid late. More lenders are also adopting a new scoring model that they believe better predicts risk. However these moves have more often than not have reduced credit scores by about 20 points. The most widely used credit score; the FICO score, ranges from 300 (poor) to 850 (excellent). Consumers with scores above 750 generally qualify for the lowest rate loans.

Here are five ways to improve your credit.

1. Pay your bills on time. Payment history accounts for roughly 35% of your score. Paying your bills on time is the most important thing you can do.

2. Increase the length of your credit history. It accounts for 15% of your score. Canceling a old card or getting a lot of new credit within a short time span can hurt your score because it lowers the average age of your accounts

3. Keep credit card balances low. Credit utilization makes up to 30% of your credit score. Try to keep the amount you borrow below 25% of your available credit.

4. Minimize new credit request. They account for 10% of your score. When a potential lender asks for a copy of your credit report, an inquiry is recorded. If you will be applying for a loan in the near future, don’t apply for any new credit cards beforehand. You can also ask the three main credit reporting agencies—Experian, Equifax and TransUnion—to stop unsolicited credit offers.

5. Maintain different types of installment and revolving debt. About 10 of your score depends on the type of credit used. How you handle revolving credit (like credit cards) carries more weight than how you deal with installment debt (such as car loans and mortgages).