There are dozens of methods used to improve a person’s credit score. Which ones pack the most punch? In this post, we’ll show you the top three ways to improve your credit score.
When you look at your credit report, you will notice two main forms of credit: installment debts and revolving credit. Installment debts are those where you took out a loan for a specific number of months and agreed to repay the debt in monthly payments. Some examples of these are mortgages, car loans, and personal loans. Having a few of these that you pay on or ahead of schedule will strengthen your credit the most. They are the best indicators to other creditors as to how you are at keeping up your end of an agreement.
The other form of credit you will see farther down the report is your revolving credit section. These are primarily your credit card debts. Because you can pay a card’s balance down to zero and recharge other expenses on the same line of credit, it is continually revolving. Other debts with revolving lines include jewelry store and retail store credit. Remember that furniture suit you financed five years ago? It maybe paid off, by you still have an open revolving line of credit. Again, having a few of these in your report in good standing will help you.
A final item of consideration in improving your credit is your outstanding debt amount in relation to your maximum credit limits. If you just bought a new truck and you have a $5,000 card maxed out, then your overall credit score will drop. Keeping your outstanding balances at or below fifty percent of their maximums will improve your score over time.
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