CREDIT CONSIDERATIONS - Part 2

(Continued from 4/15/13 post)

If you want to buy a car or house or apply for a credit card or loan, your credit score will determine your eligibility and terms.  Here's how to improve that score:

1.   Avoid late payments.  Set up automatic payments to your creditors.  If you must juggle payments due to cash flow, try to limit the number of past-due accounts.  A history of late payments on several accounts hurts your score more than delinquencies on a single account.

2.   Spread your debt over several types of accounts: installment loans, retail merchant accounts, and credit cards.

3.   Curb spending.  Keep your outstanding balances to less than 50% of your available credit.

4.   Pay down debt and don't move balances to new credit lines -- that hurts your score.

5.   If you have a short credit history, don't open new accounts too rapidly as a large number of new accounts can lower your number.  Lenders like to see a long history of responsible payments.

6.   Don't close unused accounts.  The longer you've had a line of credit open, the better it is for your score.

7.   Check your credit report by ordering it yearly for free from www.AnnualCreditReport.com.  Check for errors and follow up to ensure that they are fixed.
Sources: Consumer Reports, Small Business Services Bureau

Next month: How to fight back against credit damages . . .

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