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Published on September 24th, 2012 | by Pete

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How to improve your credit score


Credit scores are ratings given by lenders to loan or credit applicants in order to help them decide who to award loans to, and on what terms. They are based on the credit records of the applicants, which detail that person’s history of credit repayments. Different lenders apply different criteria when doing this, and two lenders could easily look at the same credit history and come up with a different score. These scores are never divulged to the applicants – they are merely informed of whether their application has been successful or not, and the terms that are available to them. That said, there are some common factors, and companies such as The Credit Expert have started to offer independent and report to confirm How often do you check your credit? which can be used as a guide to your creditworthiness.

The simplest way to improve your credit score is to build up a long, uninterrupted history of on-time loan, credit card, or mobile phone repayments. While you might think that having no history of credit might be a good thing, in that it shows that you have never had to go into debt, this is actually a bit of a red flag as far as your credit score is concerned. Lenders need to know that you have a history of being able to cope with debt, and if they don’t see any evidence of this, they are unlikely to want to lend you much money.

It is much better to show a lender that you are a responsible borrower than not a borrower at all.  You could consider taking out a credit card with a very low level of interest and just using it occasionally on a monthly basis, always ensuring that you make the repayments on time.  In this way you will help to build up a good credit history and be classified as a low-risk borrower.

One of the most positive steps that you can take to improve your credit score is to obtain a copy of your credit history. This will give you a much clearer picture of the factors weighing on your credit score. For example, there may be a chance that it contains an error such as a debt registered in the wrong name or to an old address, or an entry that you have reason to dispute for some other reason. Having identified these, you can then contact the lender in question in an effort to negotiate a correction to your credit record.  Remember to close down any credit agreements that you no longer use so the credit report will be up to date.  If you do have any defaults on your record, the report can alert you to the need to make reparations to the lender in order to improve your credit score.  Do everything you can to make these repayments on time – if you are finding it impossible it may be possible to negotiate smaller repayments with the lender.

For more information about how credit histories are used by lenders, take a look at this Wikipedia page.

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3 Responses to How to improve your credit score

  1. David says:

    Great write-up, I’m a regular visitor of your blog. Keep up the good work; I’m going to be a regular visitor for a long time.

  2. Scott says:

    Simply closing two accounts not only lowers the number of open revolving accounts (which generally will improve credit scores), but it also decreases the total amount of available credit. That results in a higher utilization rate, also called the balance-to-limit ratio (which generally lowers scores).

  3. Jessica says:

    I was able to raise my credit score after I got a couple of secured credit cards who reported to the credit bureaus. Great article and thanks for the write-up!

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