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Five Steps to a Better Credit Score

Learn how to manage your credit score and improve your creditworthiness

Think of your credit score as a picture of your credit risk. This picture reflects your risk at a specific point in time. A picture does not change; however, when you take another one, you will probably look a little different. Similarly, when your credit information changes, your score will also change to reflect the updated information.

There are steps you can take to ensure that each time a new "credit picture" is taken, it shows your best side. By observing the following guidelines, you can improve your credit worthiness:

  • Be punctual - Pay your bills on time. Late payments, collections, and bankruptcies have the greatest negative impact on your credit score.
  • Check your credit report regularly and take the necessary steps to remove inaccuracies - Don't let your credit suffer due to inaccurate information. If you find an inaccuracy on your credit report, contact the creditor associated with the account or the credit reporting agency to correct it immediately.
  • Watch your debt - Keep your account balances below 50% of your available credit. For instance, if you have a credit card with a $1,000 limit, you should try to keep the balance owed below $500.
  • Give yourself time - Time is one of the most significant factors in improving your credit score. Establish a long history of paying your bills on time and using credit responsibly. Consider keeping the oldest account on your credit report open in order to lengthen your period of active credit use.
  • Avoid excessive inquiries - A large number of credit inquiries over a short period of time may be interpreted as a sign that you are opening numerous credit accounts due to financial difficulties or overextending yourself by taking on more debt than you can easily repay.

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