Numbers do play an important role in our lives. If you believe in numerology, you can know how important the numbers 0 to 9 is. If we look into the financial state of a person, here also numbers play a big role. Those numbers are called the credit score.
You should try to keep them at a peak point. These powerful numbers help you to determine that you are going to buy a new car or home loan. Banks use credit scores to determine the credit risk you have. Higher the scores, the more appealing you look on the paper, which can make you land on the better interest rates. Even when you apply for the jobs, the employers check out your credit scores, to know if they are risks to hire you or not.
You need to have an outstanding credit score, because the lenders are forced to write off record levels of credit card debt and they are getting choosy about which borrowers are going to give the most-favorable terms. Due to the recession, the lenders are closely analyzing the credit scores according to the credit expert Bill Hardekopf of LowCards.com. Persons having FICO score more than 700 generally considered as the one with great scores.
If you want to land on to the best credit, then follow these six simple rules to have higher credit scores.
Check Out for Errors in Credit Reports
Experts like Hardekopf are of the belief that just a single error in the credit report can ruin the scores. Generally, credit errors occur when credit-reporting companies mix up your activities with those who share the same name. Mistakes occur commonly as the result of identity theft. For example, if you are an ID theft victim, your credit report payment history will account for 35% of a credit score. Check to become sure, that are you actually responsible for what appears on the credit report.
Try to get some free and online copy of credit reports once a year from the three of the credit bureaus: Equifax, Experian and TransUnion. Credit experts suggest that spacing out free copies will help you to receive one every four months and you can go for an identity theft check or clerical errors throughout the year. If you are able to find any errors on your credit report, then contact the nearby credit-reporting agency soon to correct them.
Do Not Buy Too Many Cards
If you want to elevate your credit scores, then limit the number of credit cards and other lines of credit that you apply. Every time you apply for a new credit card, the application shows up on your credit report, which is going to hurt your scores.
Do not apply for more cards. If you do so then you will be turning into a “credit seeker”, a less desirable label for those who maintain a good credit. Experts say that you do not need to apply for the credit, which you do not need or unnecessarily you will be messing up your credit scores.
Lessen Your Debts
Many credit card users are of the belief that they have to carry credit card debts to have good credit scores. The concept is very wrong says experts like Weston, an MSN Money columnist. The idea is, she says – the less credit you use, the better it is for your scores.
Idealistically you do not want to use less than 10% of your credit limit. If the total charges approach the credit limit available on the credit per month, then you may continue to hurt your credit score in spite of paying your bills regularly. Balance that is reported to the three credit bureaus is calculated from the date, which the bank chooses, so the reporting date may be the one when you are closer to credit limits.
Pay the Bills Regularly
Do you want to wait until the first of the month to pay off your bills? Whenever your credit card payments are due you should pay them immediately. Try to make smaller payments throughout the year to lower the debt quickly. Such payments are the one that helps your credit scores to elevate because they lower the debt utilization ratio. This accounts about 30% of your credit score. That is the ratio, which tells that how much debt you are currently carrying on your credit cards divided by the total credit limit on all your credit cards.
Sometimes Having More Credit Is Good
Do not fear to ask about the credit line increase, which in turn is going to increase the debt utilization ratio. If you have a credit card, you like to use it often and if you are good at making payments, then ask for a credit line increase.
However, yes, you need to proceed with a little caution. You should not ask for a credit line unless you are good cardholder. If you are not having a good credit history then do not ask for a credit history or the bank may take you as a risk and reduce your limit in turn. Be careful, since it can backfire.
Make the Credit Cards Stay Active
Just having a credit card is not enough to maintain a good credit score. It is important to use the credit card, even if you just buy a snack at McDonalds. You have to show that you are responsible enough to use the credit card responsibly. Do not close the credit card accounts that you do not use, that will bring down the credit scores. Keep your accounts active, so that you can establish the credit history as much as possible. The longer you have an account, the better it is.
Remember the strong numbers of credit scores are very important for any kind of loan or financial steps. Therefore, if you want to have a smooth financial path this year, then follow these six steps and enjoy a high credit score and a healthy credit report.
Author’s Bio: Charles Malcolm is a financial columnist for different blogs and a consultant by profession. He advises people on various financial issues like debt, mortgage, insurance and loans to make them enjoy a financially free life. He is now an acting consultant for the call centers India that is acclaimed for their 24- hour customer support.