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  • Frank Tadych

Tips to improve your credit score

Like many things in life, your credit score might not be that important to you until you really need it. Financing your purchase of a home is one of those times.

It’s important to know what goes in to a credit score, and equally important to know that there is no magical fix. Your credit scores are based on your ability to handle credit, and focused on factors like your payment history, amount owed, length of credit history, new credit, and type of credit used. There is no quick fix for your credit score, it simply takes time, patience and discipline to maintain your credit over a long period of time.

Here are six ways to improve your credit score:

Know your credit score. Start by checking your credit report for accuracy. Check to make sure no late payments are incorrectly listed, and that the amount owed for each of your counts is correct.

Pay your bills on time. It sounds obvious, but simply making your payments on time is one of the biggest factors to your score. Set up payment reminders, and if you have to enroll in automatic payments. Get current and stay current.

Check your credit limits. Your credit score will be artificially depressed if your lenders are showing a lower credit limit than you actually have. Call your credit card issuer to update the information, and ask to raise your credit limits.

Reduce the amount of debt you owe. The most effective way to improve your score is to pay down revolving (credit card) debt. Pay the highest interest first, keep balances low and pay it off rather than move it around.

Add to your credit file. What really matters is the amount you owe as a percentage of your total amount of credit. Add available credit only as needed, manage it responsibly, and avoid closing cards. Think about adding a secured credit card or an installment (personal, auto, student) loan to the mix.

Use your credit cards lightly. Racking up big balances – which are what is typically reported to the credit bureaus – can hurt your score. Limit your charges to 30 percent or less of a card’s limit.

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