Steps to Improving Your Credit Score

It is undeniable - we are facing some hard economic times. In these times it is imperative that you keep your credit score as high as possible if you have any goals of buying a house or a car or anything else that will require lending. There are 6 key steps that you should strive to take in order to ensure the best credit score possible.

1. Reduce your open credit card utilization as much as possible

This may be the most important factor of all in boosting your score. If your credit cards are maxed out, you will be viewed as a high risk by many lenders. Strive to keep your utilization below 20% - if you're already there, great! If not, put every extra cent you have towards reducing your utilization.

2. Make sure to pay all of your bills on time

This one is a no-brainer. If you establish a good history of on time payments, lenders will view you as having less risk and more credit worthy. Late payments can retain on your credit report for 7-10 years, so make sure that you keep up with the due dates!

3. Don't close your old accounts!

Another important factor to your credit score is the average age of your accounts. By keeping an old card open that you don't use, you add history to your report. If you were to go and close this account, your average history would be reduced thus decreasing your score.

4. Have a good variety and number of open accounts

This tip does not carry as much weight as some of the others mentioned above, but is also important. By carrying a mix of revolving (credit card) and installment (student loan, car loan) loans and paying them on time, you show that you are able to maintain responsibility which will increase your credit score.

5. Keep your hard credit inquiries to a minimum

This number resets every 2 years. You should strive to keep the number of requests for hard inquiries to under 2 in this time period if possible. Every time you apply for a credit card or a loan, this number is increased, which will slightly hurt your score.

6. Don't rack up any derogatory marks

Items such as bankruptcies, accounts going to collection, liens and civil judgments can devastate your credit score. Make sure that you live within your means and pay everything on time. These marks could take up to 15 years to be removed from your report so prevent them as much as possible!

Follow these 6 steps and start on your way to financial freedom!

Brad @