Tips for Understanding and Improving your Credit Score

Understanding your current credit status is a very complicated question.

Here are some helpful tips for understanding and improving your credit score.

1) The first step is to understand what impacts your score. A number of items are used to calculate your credit score. Ultimately, they will be reviewing your credit history to understand how much debt you have and how long you have had the various loans and/or credit cards. They will also take into account how often you have applied for new forms of credit and of course, how well you pay off your current balances.

2) It is important that you know what your current credit scores are so that you can take action on any incorrect information and take steps to correct any issues that are effecting your score.

3) Paying off your debt in a timely fashion will help improve your score. A helpful tip is to set up a reminder or calendar alert a couple days before each bill is due. An even better suggestion is to set up automatic payments through your bank account to ensure you are never late on paying your bills.

4) Monitor how much credit you have available to use. At first you might think it would be a good idea to close any credit card accounts that you are not using. However, that actually impacts the percentage of credit you are using out of how much credit is available to you. A high percentage could signal future creditors that your are coming close to over-extending yourself. You may want to keep some of your accounts open (unless of course, you are having to pay any annual fees – no reason to pay for something that you are not using!).  This doesn’t mean that you should apply for additional credit if you don’t need it. Every time you apply for credit, you could be impacting your score. If you suddenly apply for a number of new credit cards, it could drive your score down.

5) Unfortunately, there is no quick fix to improving your credit score.  However, if you monitor it on a regular basis and pay off your debt in a timely fashion, your score should improve over time.