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Collin Harness


7 Ways To Increase Your Credit Score

You could go your entire life without using credit. Pay for everything in cash. But most of us will need to use credit at some point in our lives. You may need to buy a house or a car or pay for medical expenses. And with the way that real estate prices are going most of us would never be able to afford to buy a property without the use of debt.

It is important to know the difference between good debt and bad debt. Don't get caught under a mountain of bad debt.

There are many advantages of having a good credit score. Mainly, you will get the best interest rates on loans from a bank with the highest credit score. You will be able to refinance easier.

Landlords run a credit check before they will rent an apartment for most people.

Most people run into trouble, because they were never taught about credit or a credit score and they ruin that score before they even figure out what it is.

Most banks now allow you to check your FICO credit score so take a look and monitor it over time.

    1. Increase your credit limit

    The more access to credit you have the better your utilization rate will be. Always be working to increase your credit limit in case of emergency.

    Don't pay to keep a line of credit open. Fees will kill your wealth so only keep lines of credit open that do not cost you anything. If it is costing you money and the perks are not worth it then close down that line of credit.

    Call you credit card provider and see if they will increase your credit limit.

    2. Keep your old credit cards open

    Sadly length of credit is a factor in your credit score. If you are in your 20s then it is highly unlikely you will have the best credit score because you are a baby when it comes to having a line of credit.

    3. Pay down your debt - increase your credit utilization number

    Credit utilization is the difference between how much credit line you have versus how much you have used. The more credit that you have available the higher your score will be.

    4. Have different types of credit

    This one is hurting me.

    I have never had a loan for anything. Not a house or car or personal loan. I went into a bank one to see if I could get a personal loan and they banker was rude so I never went back.

    There is a difference between a home loan and a credit card. A home is backed by an asset: collateral. If you stop the bank can come take your home. A credit card is not backed by an asset. If you spend all your money on a beach vacation the bank cannot come take the beach vaca.

    If you have different types of credit it improves your credit score.

    5. Dispute any charges you do not believe are correct

    There are 3 credit agencies:

    - Equifax

    - Transunion

    - Experian

    Each year you can pull your credit report from these providers for free to see what is going on. Dispute any charges you think are wrong.

    6. Monitor your credit score

    Most banks allow you to check your score through their website or app. Same from the credit reporting agencies. Monitor your score each month and make sure you are moving in the right direction.

    7. Do not open too many lines of credit at one time

    Space out when you apply for new credit. Any new line of credit hurts your credit score. You need to space out when you apply for a new credit card or home loan. This way the impact to your score is limited.

    If you have opened several lines of credit within a short period of time, do not apply for any more. Over time your score will start to increase again, but it will take time.

    8. Tip: Close any credit cards that are costing you money each year

    If you are getting benefits from a credit card: great keep it open. But if the card is costing you money and you are getting enough benefits from it to make up the cost dump it. There are so many free credit card options out there. You should never be losing money for the privilege of using a financial product.

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