I’ve been getting quite a few emails from readers on how to improve credit scores. Improving credit scores is a well covered topic on the net. However, based on my experience, lets highlight some of the reasons why high credit score is important and some of the main ways to obtain (or maintain) a high credit score.
Why a Credit is Important
Your credit score is used more than ever to check your “lending risk”. Some examples include eligibility for mortgages, credit cards, an apartment, a chequing account, even getting a cell phone contract. Not only is credit used for qualifying, higher scores mean better rates on mortgages and loans.
Credit Score Tips
Through a few quick and easy steps, you can keep your credit score at the top levels:
- Always pay your bills on time with at least the min required payment.
- Keep your amount borrowed less than 50% of your total credit available.
- Avoid applying for multiple credit products within a short span of time.
- If cancelling credit cards, avoid cancelling the ones with the longer track records.
- If retaining a high credit score is top priority, then avoid loan consolidation. The reason being is that your total credit available will decrease while keeping the total borrowed the same.
Building a Credit Score from Scratch
There are some who have made some credit mistakes in the past and are now attempting to rebuild a decent credit score. The catch 22 is that in order to build credit, you need credit, and lenders are hesitant to give money to people with lower credit. So what do you do?
- Get a secured credit card. These are credit cards that are secured with a down payment and are typically offered with lower credit borrowers. Obtaining one of these cards and paying it off regularly will help build a track record.
- Get a loan from a credit rebuilding agency/bank. The interest rates may not be optimal, but these loans are for the sole purpose of making regular monthly payments.
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