You may not think that there is much of a difference between a credit score of 600 and a score of 700, since it's only 100 points. However, if your score is 600, you are teetering on the edge of what banks and lenders consider to be a high risk, according to the Consumer Federation of America, while a score of 700 is considered good and will result in lower interest rates and better credit offers. Make a few changes to the way you use credit and you can boost your score.
Keep accounts open, especially if you've only had credit for a short time and are trying to build your history. According to myFICO, 15 percent of your score is based on how long you have had a credit history, and the longer you've had credit, usually the better. You may have a credit card that you opened while in college but rarely use any more. Instead of closing that account, try to use the card, even if only once a month. If you close one of your first credit cards, you shorten your credit history.
Pay everything on time or before it is due. If you have a history of late payments, put an end to that now. If you have missed payments in the past, pay the amount due and continue to pay the amount due each month. Paying accounts on time will not automatically remove a history of late payments from your credit report, according to myFICO, but it will help you raise your score.
Avoid maxing out your credit cards and try to keep your balances low in comparison to your total limit. Carrying a high balance will make your score drop, according to myFICO. Keep the balance you carry on each card less than 30 percent of the limit in order to lift your credit score, recommends Liz Pulliam Weston, a personal finance columnist for MSN Money.
Open new accounts only when necessary. If you apply for and open several credit cards at once, it makes your score drop, since they reduce the length of your credit history. New accounts also require a credit inquiry, which can lower your score, according to the Federal Trade Commission.
Pay your debt instead of simply transferring it from credit card to credit card in search of a better interest rate. Remember, the smaller your outstanding balance, the higher your credit score.
Check your credit report regularly to make sure there are no errors, which can lower your score. If you do spot an error, alert the credit reporting company immediately. The Federal Trade Commission recommends that you do so in writing and send the letter via certified mail, so that you will know when they have received it. Make sure you are able to provide proof that the disputed item, such as a credit card claiming you missed payments, is an error.
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