A higher credit score means better loan options with better rates, that lower your payments and save you money. Your credit score is determined by: payment history, amounts owed, length of credit history, new credit, and types of credit used.
FIVE WAYS TO IMPROVE YOUR CREDIT SCORE
- Keep balances low on credit cards. High outstanding balances in relation to your maximum credit limit can lower your score. For example it is better to have a $2,500 balance on a $10,000 limit, than a $475 balance on a $500 limit.
- Pay off debt. Do not move it around.
- Don’t open up many new accounts in a short period of time.
- If you have a credit card that has a good history, use it. Buy groceries, then pay it off. An inactive card is not helping your credit score.
- If you are deciding to pay off a car loan/student loan early or paying down a credit card, put more money toward the credit card. Why? Car loans, personal lines of credit and student loans are “installment accounts.” The payment is the same every month. Paying these demonstrates being able to handle credit responsibly. Paying a credit card off or down improves your score.