More Than Money: Get Cozy with Your Credit Report

Leonard Raskin

Whether you’re trying to “fix” poor credit or just want to improve your credit score, focusing on the areas that make up the largest percentage of your credit score will help you increase your rating more quickly.

Here’s our guide for getting cozy with your credit and staying on the good side of the rating system:

Review your credit report. Before you can improve your credit, you need to understand where it stands today. Order a free credit report annually from Annual Credit Report. Then, every year, review the report for errors such as inaccurate late payments or unfamiliar accounts. After you’ve identified incorrect, take a hard look at the blemishes that are correct. Late payments, high credit card balances and collection activity can all negatively affect your credit.

Make timely payments. Payment history makes up the largest percentage of your credit score, accounting for 35% of your rating. Try setting up automatic bill payments with your financial institution to ensure creditors receive payments on time. If you’re struggling to make the payment, consider finding additional ways to save each month in other areas. If you don’t make at least the minimum payment, the creditor may put your account in default status.

Pay down credit card balances. Paying down revolving accounts, such as credit cards and equity lines of credit, can have a serious affect on your credit. Try to get balances down to 30% or less of the total available credit limit. For example, a credit card limit of $10,000 means you should have no more than $3,000 on that card. If your credit card has a high interest rate, consider taking advantage of a balance transfer offer. These offers provide a low fixed rate for a specific term, such as 12 months. You can also ask your existing lender to lower your interest rate. Securing a lower interest rate will allow you to pay down your balance more quickly. Debt counselors typically advise paying down the highest interest credit cards first. However, if you want to improve your credit score quickly, pay off those credit cards that are currently closest to their limits. Also make sure your credit report has correct limits listed for each of your cards.

Use older credit cards. Length of credit history makes up 15% of your credit score. Credit bureaus view older credit cards favorably because you have a long history with the company. Consider using the cards you’ve held the longest first.

To getting wiser,

Leonard Raskin
Women Getting Wise on Wealth from Raskin Global
443-212-1122

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