Everyone's credit profile is unique, built by a diverse myriad of purchases and balances we all acquire over time. So if you find yourself searching for tips and techniques to help your slipping credit score, chances are you will quickly become overwhelmed with all the advice out there. The fact is, not all of this advice is accurate or wise for each circumstance, which means that even some tips intended to help your score could wind up having something closer to the opposite effect.
Keep that disclaimer in mind when reviewing these five credit tips - consider how each could apply to your situation, from your current financial outlook to your future goals (buying a home or car, etc):
If you do not already have a credit card, now is a good time to get one. If you have one card that you're managing well, then consider applying for a second and using them in rotation. You should not fall for the misunderstanding that you have to have a balance on your credit cards in order to have a decent credit score. The fact is that you do not, and you should not. However, having and also using one or two credit cards can help you see a significant improvement in your overall credit score.
There's a train of thought that asking the credit card company for a lower credit limit will help them limit their spending, which in turn will keep their score from being hurt. However, there is some risk involved with this technique. When your credit score is determined it is based on 30 percent of what you owe. The formula takes into consideration how much you actually owe, compared to how much available credit remains. This means that if you are not able to pay off your debts, then a lower credit limit will actually increase this ratio and also damage your score.
A nuisance balance is any small balance that you have on one or more credit cards. This can help your score since one of the factors that is used to determine it is how many cards actually have balances on them. Put simply this means that charging $20 on one card and $40 on another instead of the same one can actually hurt your overall credit cost. This means that you should gather up all your cards with small balances, pay them off and then use your one with the best interest rate for all of your purchases.
You will see quick improvement in your credit score when you show that you are a responsible consumer with more than one type of credit: both revolving (i.e. credit cards) and installment (i.e. car payments, student loans, etc.). If you do not currently have an installment loan, obtaining one and making timely payments can help your score significantly.
If you have any charges that should not have been posted to your card, which resulted in collections, you can continue to protest this in order to have it taken off of your rating for good.
Each of these tips will help you improve your score and achieve the credit, home, car and even job that you truly want.