How can I improve my credit score?

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If you find yourself in a situation where you have a poor credit rating, you are not doomed. There are some important steps you can take to improve your credit although depending on your score and situation, it could take as little as 30 days or as much as six months or more.

One of the most important things you can do is PAY YOUR BILLS ON TIME. Many creditors give a 30 day grace period however not all do so it is important that you are diligent to pay your bills when they are due. Creditors will report delinquent payments to the credit bureaus each month when payments are late.

KEEP TRACK OF HOW MUCH DEBT YOU OWE. If you are paying a lot of creditors every month, lenders may see this as a negative even if you are making your payments on time. They will also assess what is called your income to debt ratio. Each lender and loan has a different qualifying ratio, but if you owe more than the ratio allows you may not qualify or qualify for a less money based on this data.

TRY NOT TO MAXOUT YOUR CREDIT LIMITS. If you currently owe the maximum on your credit cards, try to take steps to pay more than minimum payment each months to pay down your debt. Lenders frown upon people who month after month make only the minimum payments and keep their balances high or maxed out month after month. It indicates a tendency to stretch finances to the limit on a regular basis and could put strain on finances if unforeseen events happen.

DO NOT HAVE YOUR CREDIT SCORE RUN MULTIPLE TIMES or OPEN SEVERAL NEW ACCOUNTS. Each time you run your credit or allow someone else to run it by opening a new credit account, you subject your credit to a slight decrease in score. Although an insignificant amount on an individual basis, added up over a short period of time can hurt your credit. Lenders are now also looking to see how many times a credit has been pulled to determine if you are a credit risk and looking to obtain more debt beyond the potential new mortgage.

These small steps over time will help you improve your credit score. If you have been told that you don’t qualify for a particular amount because of your credit or have been denied outright, you should try taking these steps to improve your credit and then reapply for the loan after a few months.

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