Friday, 18 December 2009 00:00
The subject of how to raise credit score is one that comes up frequently. For many, finding a solution may prove to be elusive. For others, the process may turn out to be a lot easier than some imagined it to be.
The key is simply finding the most common denominators that cause a lower credit rating. Understanding the main causes for low credit scores is the first step in looking how to improve them.
There are two main causes for the lowering of a credit rating: Paying bills late and not having much available credit left on credit cards. While many people find themselves committing such errors, the easiest "secret" on how to raise credit scores often centers on reversing both of these problems.
That means whenever you receive a bill in the mail (or if you go paperless which has become the preferred modus operandi of many companies), you need to make sure the bills are always paid on time so as to avoid the common problems associated with late payments.
With the new credit card rules, you have more time to come up with payment before incurring penalties. Use this to your advantage.
Actually, going paperless can help you dramatically since you can schedule automatic payments long in advance on all the credit cards and other monthly bills that you need to pay. By setting up you payments in advance, you will not have to worry about issues related to debt and late payment.
If you pay all your bills on time for at least a period of 6 months, you will slowly discover your credit score begin to improve.
Also, having high balances will hinder credit scores. That is why keeping credit card scores low is advisable for those that may find themselves in a situation where their credit debt is undermining their ability to maintain a good credit score
In general, those wondering how to raise credit score need to keep at least 70% of their remaining balance free. So, if your limit on a credit card is $5,000 you will not want the balance to go beyond $3500. This will, in turn, ensure that your credit rating does not suffer dramatically.
While paying off such debt can prove difficult, one of the best ways to make sure the debt does not reach catastrophic levels centers on avoiding unnecessary and excess credit borrowing. Such an issue could prove enormously problematic if not kept in proper check. As a rule, always remember that high balances result in lower credit scores. So keep your balances low!
One final way to achieve the goal of how to raise credit score involves making more payments more frequently. This often helps keep your "average daily balance" relatively low. That is why frequent payments are so helpful to eliminating a number of problems associated with debt. Not all creditors use the average daily balance method though.