Tips to Raise Your Credit: Part Two

A stack of credit cards that are all different colorsFear not, more credit raising tips have arrived. Your credit score is incredibly important, as it determines your approval for items like car loans, credit cards, and mortgages. Your score also influences the interest rates you’ll have to pay on those loans. If you’re looking to boost your score to a 700 or higher, follow these helpful tips. Also, if you missed the first round of credit advice, see Tips to Raise Your Credit: Part One.

Keep Lower Balances on Credit Accounts

One of the elements that factor into your score is your credit utilization ratio. The ratio is essentially how much credit you are using divided by the amount you could be using. Lenders look for utilization ratios under 30%, ideally closer to 0.

Don’t Close Unused Credit Cards

Leaving credit accounts open can help increase your credit score, even if you don’t use them. Keeping the accounts will lower your credit utilization ratio by keeping your available credit higher. If you know you won’t need to use those accounts anymore, a good strategy is to simply cut up the cards.

Only Apply for New Credit Cards as Needed

Don’t take the previous tip as advice to go opening up new cards. Applying for new credit accounts can lower your credit score 3 to 5 points per application, and the effect lasts a whole year. While this hit won’t hurt much on its own if you apply for many accounts in a short period of time the negatives add up fast.

Leave Old “Good Debts” on Your Record

“Good debt” is debt that you paid off on-time, such as paying off the remainder of your mortgage. This paints you in a good light by showing that you’ve been creditworthy in the past. Many people want debts expunged from their records as soon as they’re paid off, but a good track record can be an asset to you if you need to take out another loan in the future.

Don’t Do Anything Risky

The best action you can take to raise your score is not doing anything risky like missing a payment. Your score will naturally rise over time as long as you make your credit payments consistently. Another area to avoid is using your credit card at business-like pawn shops or divorce lawyers’ offices, as they could be viewed as an indicator of potential financial hardship in the near future.

Take every step you can to ensure your credit is helpful in your pursuit of property like a home or a car. Once you’ve secured those assets, however, you’ll need to protect them with insurance. This is where the experts at the TJ Woods Insurance Agency really shine. Contact us with questions you have about insuring your home, automobile, or other possessions. We’ll offer you a free quote for your situation.