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Improve Your Credit Score With These Tips
Lenders make their
approval decisions and set interest rates using consumers' FICO
scores. Prospective borrowers whose scores are 720 or higher will be
eligible for prime rates, but those with lower scores will need to
make improvements if they want a better rate.
First, they should always make timely payments. If a late payment is
listed on their credit report, they should ask the lender to remove
it or dispute the lender's claim. They should also keep each
credit-card balance under half of the limit, pay the balance in full
before the creditor reports to the credit bureaus, and avoid closing
accounts - especially older ones, which demonstrate a pattern of
credit responsibility over the years - because it boosts the overall
credit usage ratio.
However, those with too many credit cards - with three to five
considered reasonable - may want to close the newest accounts.
Furthermore, consumers should not apply for small loans or credit
cards in the year before applying for a mortgage. Because multiple
credit inquiries can lower their scores, they should obtain a copy
of their credit report to provide to lenders when comparison
shopping.
Finally, borrowers should diversify their debts among mortgages,
auto loans, and credit cards.
"Consider These Factors to Boost Your Credit Score," Wall Street
Journal Online (05/03/03); Kadet, Anne.
Abstracts Copyright © 2003;
Information Inc., Bethesda, Md.
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Tri State Realty, Inc.