Finance Articles

In an ideal world everyone would have a credit score above 800, own a gorgeous house, have zero debt, and of course there would be no credit credit cards. Since life is far from ideal here are 3 credit score tips to show you how to raise your credit score. These tips are based on 3 credit score criteria which are used in the formula to evaluate creditworthiness.

The most important thing you need to do to raise your credit score is to always pay your bills on time. Over one third of your credit score is based on paying your bills in a timely fashion. It is extremely important to pay bills when they are due or earlier. Nothing else can ruin your credit as fast as repeated late payments. Lenders will be able to see your history and if it is full of late payments, they will charge you a higher interest rate or maybe even decide not to loan you money at all.

Close to 30% of your credit score depends on how much of your credit you use at any given time. Ideally one should keep it below 50% of the available limit. This will prevent raising alarms with your creditors, who keep track of your credit usage and decide to lower limits or increase APRs based on usage. Once your limit is lowered, your utilization rate is likely to go higher, as you will now have a lower amount to utilize. This can again lower your credit score. So, this is the second point to be kept in mind while striving for a good credit score.

Thirdly, you need to make sure not to ask for more credit than you need, diversify your debts, and build up your credit history. Thirty-five percent of your credit score is based on these three factors, or ten to fifteen percent for each factor. Credit scores reward longevity and seniority, like most financial systems. If you've kept a credit card for fifteen years, you will receive a lower interest rate than a 20-year-old with no credit credit cards.

Your credit score is influenced by the kinds of debt that you have- mortgage debt is not as bad for your credit score as credit card debt. Creditors favor diversification, and thus will reward you for having your debts spread out. Any application for credit will result in an inquiry being placed into your credit history, lowering your score by several points. While these last two effects are smaller than the others, they do affect your credit score, so keep them in mind.

For a person who does not have huge financial requirements, the golden rule to raising your credit score and keeping it consistently high is to borrow only when it is a genuine requirement and to stick to repayment schedules. However, you need to have a credit card if you want to raise your credit score. The basic objective of the score is to help you get credit at a lower rate, as a high score increases your reliability and integrity.

These 3 credit score tips will tell you how to raise your credit score. First, pay your bills on time - this is 35% of the scoring system. Second, never use more than half of your available credit - this is another 30% of the score. Third, never apply for more credit than you need. Each time you apply, it lowers your score by a few points. Secured credit is preferable to revolving debt like credit cards. Remember, you are building credit so that it is there when you need it for buying a house or other important purchases. No credit credit cards alone will get you there.