Improving Credit

Following these habits can boost your score:

Always pay on time
Your payment history makes up the largest chunk of your credit score, so making your payments on time is extremely important.

Pay down existing debt
Even if you have never missed a payment, a large debt load will lower your score. Maxing out revolving accounts or a high utilization ratio will have a negative impact on your credit score. Explore ways you can lower your interest rates and free up cash to make more than the minimum payments to pay down your revolving debt.

Avoid taking on additional debt
Besides paying down existing debt, make an effort to not take on more debt in the future. For revolving credit, ideally you should not charge more than you can pay off in full the next month, but at the very least, try to keep the balance well under half of the credit limit.

Check your report for errors
Many reports contain errors. Check your credit report from the three bureaus annually and dispute any inaccurate information.

Keep your old accounts
A long credit history with the same accounts indicates stability.

Limit balance transfers
While transferring balances to "teaser rate,"? or introductory 0% interest rate, cards can be a way to efficiently get out of debt, it can also have a negative effect on your credit score. The accounts will be new and likely have balances close to the limit to maximize the advantage of the low rate—two factors that lower your score.

Avoid excess credit applications
When you apply for credit, your score decreases just a bit. If you do it frequently, a creditor may see it as a sign that you need to rely on credit to pay your bills. Try to limit inquiries to no more than two per year unless shopping around for a mortgage or auto loan.

Obtaining your score
When you apply for credit, the creditor may provide you with your score at no cost. Otherwise, if you want to see your score, you typically have to pay for it. There are a variety of services that sell different types of credit scores, so when you are purchasing your score, it is extremely important to pay attention to what exactly you are getting.

Since it is the mostly widely used, it generally makes the most sense to purchase your FICO score. However, keep in mind that you may not be seeing the exact same score a lender will see. (There are different versions of the FICO score available. Additionally, there are many creditors that use an internally-created scoring model in conjunction with or in lieu of the FICO score.) Checking your credit score can be helpful if you are planning to get a mortgage soon and want to have an idea if you will get approved or qualify for the best interest rate. To purchase your score directly from FICO, you can visit www.myfico.com.

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