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Can You Improve Your Credit Score?

By Ruth Racey
Published: Sunday, November 1st, 2009

There is always a good reason to improve your credit even if you already enjoy a favourable credit score.  Improving your rating from good to excellent will open more doors of opportunities for you when applying for loans or new credit.

Let us not forget that lending companies reserve their best deals for customers with the best ratings.  Lenders are more confident extending credit to people who have shown their best in managing credit and paying debts.

Obviously, if you suffer from a low score, lending companies will be hesitant to approve the application.  While those lenders who are willing to extend you credit may do so in exchange for higher interest rates and fees. 

On a more positive note, anyone can improve his/her personal credit score.  All it takes is to know the right steps, be motivated, and be willing to do the task at hand.  Below are the steps in building up credit:

Fix your credit report if there are errors.  Errors or mistakes in reporting can easily be fixed.  You can send a letter to the reporting agency that issued your report and ask for corrections.  It takes 30 days for the investigation to complete and if your disputes were found to be valid, you will be issued a new copy of your report with the errors corrected.

Do not delay.  You need to be more conscious about the due dates to avoid late payments.  Thirty-five percent of your total score lies on your ability to pay on time.  Take note that even a few delays can hurt your score especially if you already have bad credit. 

Do not exceed the limit.  Another option to improve your score is to keep debts much lower than the credit line.  Even if your card offers a very low rate, do not take advantage by using 90% or 100% of your available credit.  Keeping the credit to debt ratio low is an effective way to increase your score.

Do not grab all credit card offers.  Card companies often send mails from time to time inviting potential cardholders.  You may be offered a free t-shirt or coffee mug just for signing up and processing an application.  Although this may seem like a harmless thing to do, card companies will request for a credit report upon reviewing your application. 

Too many inquiries in your report can be bad for your score.  Potential lenders may see this as a negative trait because you are sending applications to plenty of credit card companies.  Furthermore, if a card company rejects the application, it can also cause damage to your credit rating.

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