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John E. Pytte Nov. 17, 2015

Credit scoreYour credit score is a sneaky little number that seems to follow you around everywhere. It can affect your ability to take out a loan or credit card, or to receive the best possible interest rates. But where does the score come from, and how can you improve it? The credit score itself is generated from a credit report. The science behind the score can seem murky and convoluted, and it can be difficult to understand how to raise credit score. Below are some simple starting points to help get you started.

Know where you are starting

When determining how to raise credit score, it is important to know where you are starting from. Be sure to get a current credit report. Confirm that all the reported accounts are correct and the amounts due on those accounts are also correct. Verify that there aren’t any unwarranted late payments being reported. If you find errors on the report, contact the credit bureau to dispute them. Once you know what your credit score is, you know how much you need to do to improve your score.If your credit is somewhat "less than perfect," you may be wondering what steps you can take to correct it. Your credit is important. It affects all of your major financial transactions, and can make planning for your future easier or more difficult, depending on your score. It can affect more than your finances; it can affect where you live, your personal relationships, and your overall happiness. In order to get your credit back on track, here's a few helpful steps to take:

Payment History

Having a solid payment history is a big part of your credit score, accounting for 35% of your overall credit score. Even if your bills are just a few days late it can make a big impact. Make sure your bills are paid on time. Setting up an automatic payment for your bills will ensure that you are never late. We all make mistakes, so if you were late on a payment, make sure you get current and stay that way. Remember, building a payment history takes time so stay patient and good things will come.

Check your limits

It does not look good to the credit bureau if you are maxing out your available credit every month. The ideal ratio of debt to available credit is 30% of your maximum available credit. There are a few ways to counter this though. If you had a particularly rough month where it was necessary to approach your maximum amount on credit, try making two payments for the month. Make one payment before the date the statement closes to minimize the total amount reported to the credit bureau. Make a second payment before the billing date so that your bill is paid on time and you won’t incur late fees. Also, make sure the correct limit for your credit card is being reported on your credit report. Having a lower limit reported than you actually have may negatively impact your available credit ratio and hurt your score. By paying off debt on your credit cards, you can positively affect your score by decreasing the amount due. The less amount due means the more available credit, making a better debt to credit ratio.

Get a credit card

Simply having a credit card shows the credit bureau that you can be trusted and are responsible with credit. But most importantly, once you have a credit card, be responsible. Keep spending to a limit you can comfortably pay off and make sure you pay the bill on time. If you are not able to get your own credit card, due to poor credit history or a lack of credit history, it is possible to be added as an authorized user to a family member or close friend's credit card. Be sure to work out a payment plan with the main card holder ahead of time. It can also improve your credit score by diversifying the different types of available credit you have. Having a mix of traditional credit cards along with loan payments, or credit cards from a furniture or electronic store can help your overall score. But remember, only open new lines of credit as they are needed. Contrary to what you may think, cancelling unused credit cards can actually hurt your credit score by showing the credit bureau you have less available credit.

John E. Pytte, Georgia Debt Relief

If you need help raising your credit score or getting out of debt in Savannah or Hinesville, contact us today for a free consultation. Let our knowledge and experience help you get back on the road to financial freedom today.