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Five Smart Tips to Improve Your Credit

By Colleen Colkitt

Your credit score is more than just a number, it can determine whether or not you get approved for loans or qualify for financial assistance. Credit scores influence all major purchases you might need to make, such as making down payments on houses or places for rent, because your credit score is a number that indicates how reliable you are on paying a loan back. This will factor into how much you are allowed to borrow in your loans and how much financial assistance you can get. The higher the score, the better off you are.

Believe it or not, credit scores don't just influence big decisions like mortgages and loans. Credit is used for college tuition, getting approved for a car, and even being authorized for major credit cards.

Credit takes time to acquire and repair, so by staying on track and continuing to use these good tips, you should see improvements in your score in no time!

1. Pay Bills On Time

This should be a given, but for some people submitting prompt payments is not as easy as it sounds. First it's important to keep all bills and important documents in a safe place, where everything can be kept from billing statements to your checkbook and records of all transactions.

Set reminders for yourself on your phone and computers, as well as making written reminders. Keep a schedule, and stick to making payments on the same date each month so it becomes a part of your routine or habit. Paying bills late will just add pesky additional fees and force your credit score down, so remedy this by staying organized and on top of things.

2. Stay Within Your Means

Don't try to pay for big ticket items just by opening a new credit card. This will only make things worse and put more of a burden on your score. Fix this by using existing cards and making small payment installments over a period of time.

In addition to this, continue to make payments to lower any outstanding debt you may have from other cards or finances. Even if you cannot make the full payment amount, small installments will help raise your credit score because you will be seen as reliable and able to pay off debt.

3. Credit History

Actions you may have taken in the past can affect your current credit score. How much revolving debt (credit card) compared to the total amount of revolving credit is considered, as well as the length of your credit history. Sometimes a short credit history can work against you, but timely payments can offset this.

The type of credit you use is also looked at, such as consumer finance, revolving, and installment methods (personal loans, auto, mortgages, and student loans). Other factors including foreclosures and possible bankruptcies also affect your score, so disclose any of these histories when determining your true credit score.

4. Protect Yourself

Check balances on your bank account daily to make sure you don't have any suspicious activity, like purchases you never made on your statement. Be smart about online shopping and research any online store to make sure the site is credible and legitimate. Be cautious about entering any credit card or address information on sites, and be sure to use secure and private Internet connections when doing so.

Put pass codes and security protection on your phones and computers so that in the event either is lost or stolen, no one can access your personal information. Many online scams come in the form of emails, coercing you to give money or just your information for a "good" cause. Research all charities similar in nature, to double-check for authenticity.

5. Get The Facts

When determining your credit score, there are many small errors that can cause a false score. It is tedious work, but check over the information you provide to make sure you aren't getting an inaccurate score.

Sometimes late payments, charge-offs and collections can be filed that are not yours, so correct these mistakes as soon as you can. Borrowing limits on credit cards may be reported as lower than they actually are, making it seem as though you have exceeded your credit limit, so be sure to have these reported accurately. Negative items that are over seven years need to be taken off your reports in order to provide a proper credit score.

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