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How can you improve and maximize your credit scores?

By Derek Brown
Published: Thursday, October 29th, 2009

Lenders these days are very particular about providing credit such as mortgages and car loans to only those with high credit scores. These scores provide the lender an idea of the amount of risk that is involved in you that is your likeliness to pay back the amount.

A higher score represents lesser risk for the lender. As such, having a high credit score is extremely essential and desired for any borrower. For the purpose, there are number of techniques that help to better upon your present credit reports. But for this you need to understand what goes into determining credit scores.

The scoring system basically looks at five main thrust areas in your report. These are the amounts that you owe, payment history, type of credit, length of the credit history and new credits availed, with payment history being the most important of all. By improving upon these five wide parameters, you can look to increase your credit score.

However, this also requires a lot of time and effort to be put in. the best ways are the obvious one i.e. to quickly pay out the debt and dispute any kind of negative information that might make its way to your credit report.

Also, you can formulate a plan and move along it in trying to improve and maximize your credit score. For the purpose, firstly improve upon your history of payment. This can be done by paying up all bills timely and clearing all past dues. This helps drive up your credit score.

Next, try and maintain a minimum debt level as high debt credit ratios drive down your credit scores. Also, keep a check on the time length of your credit amounts.

An important aspect is to manage multiple and new credit in a wise manner. This is because several inquiries for credit at once and multiple new account openings lower the credit score. So be wise and choose wisely. Also, if multiple inquiries are a necessity, try keeping them bunched together as closely as possible.

And finally the type of credit too helps in pushing up your score. A good mix of different types of credit is much more useful than having more of the same kind. Also prefer less installment loans than one with many as your credit score remains low till the time the loan is fully paid up.

The scores typically range from 300 to 800. And a higher score increases your likelihood to gain a loan at interest rates that are a minimum.

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