Posts tagged: open accounts

Top 5 Ways To Build Your Credit Score

There are several things you can do to ensure that your credit score improves. Obviously, the higher your credit score is, the more options you have at your fingertips. Here are the top five things that will give you a higher credit score and a long, healthy looking credit history.

1. Pay your bills on time

One of the most important things that creditors see when they look at your credit history is your payment history. This can make or break a good credit score. When creditors see someone who has trouble making payments on time, they see someone who is not dependable with credit cards. Because you don’t appear to be dependable, your score will go down and you will be less likely to receive credit in the future. So if you strive to pay on time one hundred percent, your credit score will not only stay protected from falling, but it will actually increase gradually.

2. Keep old accounts open

In most cases, the older the credit card account, the better it is for your credit score, even if that account is not active. Having an old credit score shows that you have a long credit history, and allows creditors to see how well you managed that credit card for a long period of time. If you have not managed that card well and have made late payments on it, closing it out will not help then either. Having bad records like that will stay on your credit report for several years, whether or not the account is closed. Only time and better credit management can heal the damage done to your credit report in the past.

3. Using credit cards

Just the fact that you have and use credit cards is a step up to a better credit score, though only if you handle them well. If you make your payments on time, and spending only the amount that you know you can pay back, your credit score will benefit from the mere usage of credit cards. Paying off credit cards regularly is a big boost. When you’re still in school, it can be a good idea to to apply for student credit cards just to get things rolling.

4. Keep the number of credit cards low

Sometimes creditors will see someone with several credit cards as a potential risk. When you have a lot of credit cards, you have more of the potential to overspend, and therefore not pay the money back on time or in full. The number of credit cards you can manage and how much of a risk you are at is up to you, but keep in mind what looks good to your creditors.

5. Keep the balance low

When you have credit cards, it’s good to keep the amount you spend within fifty percent of your credit limit. Why? If you keep the balance below half, you will not go over, or even come close to maxing out. When you hit the half way mark, it’s best to pay off your credit card, or at least pay it down to a smaller amount.