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Specialists Lay Out Five Credit Boosters

By Sally Maison
Published: Monday, October 12th, 2009

2009 is a troubled year for most Americans. Unemployment rose to 9.8 percent which means that almost a tenth of US population do not have sufficient source of income to pay off debts and sustain cost of living. Lack of income resulted to poor credit scores which further lead to inability of many Americans in acquiring credit which could have jumped start their finances. This turned into a vicious cycle of unemployment, debt, and economic recession which prompted experts in launching major campaigns that would educate consumers about debt management. Finance experts point out that there are five factors which a person must focus on in order to improve his credit score.

Specialists Lay Out Five Credit BoostersDebt advisers say that paying debts on time should be the priority of consumers, noting payment history as the biggest factor of a credit score, which makes up 35 percent of it. Borrowers are advised not to miss out on payment deadlines or they will look bad in the eyes of creditors. Specialists say that debts unpaid 120 days after due date have serious effects on one’s credit score while card debts that go beyond 180 days could easily lead to a charge-off, another red flag for potential lenders.

Consumers are also advised to be mindful of the debts they owe and their total amount. People should track how much they owe on house and car loans, credit card, and other debts, experts say. They remind consumers that outstanding debt makes up 30 percent of a person’s score so they are advised to avoid racking up too much balance. Economists are happy to announce though that current financial crisis gave Americans a more responsible mindset regarding credit.

However, cutting on debts is not enough to impress creditors according to industry experts. They say that one should also show a solid credit history before his score goes up beyond 800. People with longer histories are more favored clients by lenders, experts say. Consumers are advised not to cut old credit cards since they could help in boosting 15 percent of their score. Accounts that have been “paid as agreed” will remain a positive mark across a person’s name for about two years, they add.

Experts also advise clients to be very prudent on their loan applications. According to them, hard or third party inquiries on a person’s account with the bureaus could affect 10 percent of his credit score. Another aspect that consumers should be mindful of is the number and types of accounts they open. Creditors consider borrowers who have many debt accounts as high risk clients so they are either charged higher interest rates or denied loan application.

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