by Kirsten Hines

Created on: August 27, 2010   Last Updated: September 17, 2010

Improving your credit score can be easy. A good credit score is above 700. Having a good credit score is important for several reasons: lower interest rates, getting a loan, and lower insurance premiums.

Pull your credit report

Each year you are entitled to one free credit report. Pull your credit report to see if there are any fraudulent debts. If there are, immediately dispute them to have them removed. Generally it is simple to have these incorrect charges removed from your credit report. Your credit score will improve as soon as these are removed.

Pay down your credit card balance

Your credit score is based on how much debt you have incurred. If you have a multitude of credit cards that are maxed out, this lowers your score. Start paying down each credit card. You can choose to pay your cards off in two different ways. Start by paying the lower balances first to gain momentum, known as debt snowballing. The other choice is to pay the high interest credit cards first. 

Don’t close your credit cards

Once you have your credit cards paid off, do not close the cards. It is important to keep the card open, showing your debt to credit ratio in a more positive light. Don’t start charging the card up to the maximum again. Instead you want to use it every once in awhile, but pay it off in full each month. This will keep your credit score higher while maintaining your finances.

Pay your bills on time

Late payments show up on your credit score. Take the time to ensure your bills are paid on time. This is important to maintain your score. It will also save you money on late charges. There are several ways to make sure you don’t miss paying your bills: keep a calendar, set up auto-pay or have the bills debited automatically from your account. This will also stop late charges which can add up quickly.

Don’t apply for new credit

Each time you apply for credit it shows on your credit report. If you are applying for many types of loans or credit cards it will seem you are desperate. Instead keep paying cash and only purchase what you can afford.

You have achieved your goal

It takes time depending on your debt, but it can come to fruition. Be diligent by sticking to your plan and your score will slowly rise to your goal.

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