Monday, December 15, 2008

Cleaning up your Credit

Your credit score can either save you money or cost you money. It can stop you from getting a job and keep you from getting insurance. It pays to understand what you can do to make it the best it can be.

Get Your Credit Report and Scores
By understanding your credit report, it will tell what actions you need to take to ensure your credit score is as high as possible. Equifax Gold Credit Monitoring allows you to run your credit report free every month.

Step 1
30% of your credit report score is attributed to credit balances. Keep your existing balance at or below 45% of your available limit. It is therefore important that all creditors report the available credit - or high limit on your credit report - or it harms your score. So get the credit company to add the limit to your report, or don’t do business with them.

Step 2
35% of your score is made up from your actual payment history. Whatever you do, make your payment within 30 days of the due date. Only 30+ days late will appear on your credit report. One way to build up your credit is to use your credit cards for everyday purchases; then pay your credit cards in full monthly.

Step 3
15% of your score is based on credit history. So it is important not to close your credit accounts that have been opened for a long time with a good rating. Longer credit history equals a higher score.

Step 4
Keep a good mix of your accounts. A good mix would consist of 3-5 credit cards, an installment loan (auto), a mortgage rating. Also inquiries impact your score by 10%. Each inquiry can impact your score by 5 points.

Step 5
Do you have high debt levels (over 5K in debt)? will negotiate your debt with your creditors and help you lower your payments. The short form is free; you have nothing to lose if they can’t save you money.

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