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What are some tips to increase my credit scores?

By Derek Brown
Published: Friday, May 21st, 2010

Having high credit scores is a sign of good financial health and spells many advantages and convenience for yourself and your family. For instance, being in good financial health means you are assured of future financial aid should you need it. You might need a loan for a new car, a new home, or loans for your son going off to college. Having high scores would indefinitely make things easier.

Increasing your credit scores is therefore a must. Although the prospect of maintaining or hiking up your scores may be daunting, it is not impossible. As you may know, a good score is that of 700 and higher. Most people’s scores range from 600 to 700. There is still reason to take heart, however. The following are ways of hiking your scores up to the magic numbers of 700 and above.

First, keep track of your bills and pay on time. Constantly having overdue bills will make creditors mark you off as a “risky” customer. The consequences of having such a reputation range from high interest charges to denied loans. When put in a bad situation, such as when you might not be able to pay on time, inform your creditors as soon as possible. You may also want to seek counsel from a non-profit and legal credit counselor.

Avoid accumulating too much debt, as this greatly reduces your credit scores. Again, pay on time. When you finally are able to pay your debt off and your account is put on zero balance, leave it unclosed because it may help increase your score.

Next is to avoid getting too many loans which you are not able to pay immediately. Having many partially-paid loans simultaneously will greatly decrease your scores. On the other hand, having loans with preset payments as well as installment loans increases your scores, given that you are able to manage them well. The best way is to go for loans one at a time.

Another way to increase your scores is to avoid signing up for too many credit cards accounts. Ideally, you should not apply for another account before three years have passed since the previous account you signed up for. More so, speedily signing up for new accounts with a bad paying history would create more problems, as this is a bad sign for creditors.

Also, having too many credit cards is a temptation to spend unnecessarily and excessively. It is best to keep a single or two cards for such situations when you cannot pay by cash.

There are more ways of increasing your scores. Ultimately however, paying on time and being honest is the best way to increase your score and avoid future inconvenience.

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