Improving Your Credit Score

If you want to improve your credit score, you should make sure to pay your bills on time. On time payment is perhaps the most important factor for a good credit score. Even if the debt is very small, on time payment is very important. The amount of the debt is not considered as highly as whether the debt is paid on time.

Other ways of improving or maintaining a good credit score include keeping low balances on credit cards and other revolving credit, limiting your applications and acceptances for new credit accounts, and paying off debt rather than simply shifting it. On the other hand, closing unused accounts may not be a good strategy for improving your score. Having fewer accounts open, but keeping the same amount of debt, can actually hurt your score rather than helping it.

While multiple credit inquiries will still appear on your credit report, recent changes have minimized negative effects on your score. This is good news for those who wish to shop for rates with several mortgage companies. Inquiries from consumer oriented places like auto or mortgage lenders are not considered within the first 30 days, whereas multiple inquiries within a 14-day period are treated as one. This minimizes possible damages from companies checking your credit while you shop for the best loan.

Your score may be accompanied by up to four reason codes, identifying reasons why you didnýt score higher. These reasons can help your lender explain to you why you have been turned down for a loan or offered a higher rate than you expected. Another problem you may have with your score is receiving one at all. You'll need at least one account that has been open for six months or more and at least one account that has been updated in the last six months. If you Don't meet these requirements and Don't have a score, you will probably need to develop a credit history before getting a mortgage.