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Building your credit score

By Janet Lacey
Published: Tuesday, October 13th, 2009

Your credit score is an important number that ultimately decides your place in the financial world. Without a good score, you might have a very difficult time in trying to obtain money in order to pursue your ambitions or even just to buy a decent house or a car. As more banks gear up and tighten their bolts to ensure that they don’t lend money to people who are incapable of returning it, it is imperative that you understand credit score and keep it at a good figure. A poor score is guaranteed to make you work much harder to get things done, as you might not receive all the resources that you need.

However, if you are amongst those individuals who don’t have a particularly good score, don’t despair, because it is possible to build on your score and improve it. With a little effort from your side, you can successfully work out a strategy that is guaranteed to boost your score from the figure it is currently. Before you go out and do something drastic, you need to start small. First, go through your credit report carefully and see for yourself whether there are any errors in them. If you do spot some mistakes, rectify them immediately. This will ensure that you don’t have problems later on.

Next, don’t go around closing accounts because someone told you that it is a bad thing to have too many accounts. This is a myth, and the reality is that your credit score is actually depended on the number of old accounts that you may have. Since most of these old accounts are well maintained, creditors are bound to add that to your credit score and indicate that you have traditionally maintained accounts in good stead. Furthermore, closure of too many accounts might even be seen as a danger sign as creditors might than try to start looking for any problems that you are having with your accounts which might be the reason why you are closing them.

The most important thing that you can do to ensure that you have a healthy score is to pay your bills on time. A missed bill affects your credit score badly, and you might end up losing valuable points because you were unable to pay the bills in the manner you were supposed to. Most people who have a poor score are the ones who never used to pay their bills on time. Don’t be one of them and pay the bills at least a week before the due date.

It is easy to read about tips but harder to implement them. If at first you are finding it challenging, don’t let it deter you because it is possible to build on your credit score even if people claim otherwise. Since the score is not a fixed number, people can either improve it or deteriorate it further, depending on how they change their spending habits. It is established that it is important to maintain a good score; so remember to not foolishly invest your money in something extravagant when you are not able to make monthly bill payments on time.

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