The shape of your credit can significantly affect your fiscal future. Your credit score will largely determine your ability to finance a house or car, as well as the interest rates applied to loans of any kind. Some employers, in fact, now consider the credit history of potential workers when hiring. Raising your score can be a formidable task, one that requires consistent and strategic effort. However, you can take certain measures to increase your credit score quickly and gain momentum toward financial freedom.
Obtain a copy of your current credit report from each of the leading bureaus. There are three major organizations that store the credit history of consumers, Equifax, TransUnion and Experian. Each resident of the United States is entitled, by law, to receive one free copy of his credit report every year. AnnualCreditReport.com is an online resource dedicated to providing to individuals a means of receiving their free yearly report.
Keep your accounts current. Making late payments will bring down your score and cause creditors to apply higher rates of interest on future loans. Even one delinquent payment can limit your worthiness to lenders, boost the costs of insurance and inhibit your ability to obtain gainful employment.
Pay down or eliminate lower balances. An open line of credit with a low outstanding balance looks good on your report. The lower your debt-to-credit ratio--the percentage of what you owe in comparison to your spending limits--the better your chances of increasing your score.
Keep older accounts open. Having a strong credit history is vital to keeping a high score. It may seem intuitive to close credit cards that you no longer use that much. However, a long-standing reputation of on-time payments says more to future creditors than the short history of recent accounts.
- Avoid "back-to-back" examinations of your credit, especially for different types of loans. Rapid credit checks made by various lenders can lower your score.
- Beware of retailer credit cards. Store cards, while offering appealing introductory terms, often come with a high rate of interest and charge the user a number of repetitive fees.
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