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Improve
Credit Score
Date: October
22, 2002
By: John Chen
How
to improve your Credit Score.
A Credit Score model is very
complex and will often differ among creditors and for various
types of credit. If one aspect changes, your credit score may
also change -- but any positive score change largely depends
on how that aspect relates to other aspects considered by the
model. Often, only the creditor can actually explain what
might improve your credit score under their unique model used
to determine your credit worthiness.
A Credit Score Model
generally evaluates the following types of information in your
credit report:
- Have you paid your
bills on time?
It is likely that your credit score will be affected
negatively if you have paid bills late, had an account
referred to collections, or declared bankruptcy.
- What is your
outstanding debt?
If the amount you owe is close to your credit limit, that
is likely to have a negative effect on your score.
- How long is your
credit history? An insufficient credit history
may have an effect on your score, but that can be offset
by other factors, such as timely payments and low
balances.
- Have you applied
for new credit recently?
If you have applied for too many new accounts recently,
that may negatively affect your score.
- How many and what
types of credit accounts do you have?
Although it is generally good to have established
credit accounts, too many credit card accounts may have a
negative effect on your score.
A credit score model may be
based on more than just information in your credit report. For
example, the model may consider information from your credit
application as well: your job or occupation, length of
employment, or whether you own a home.
To improve your
credit score under most models, concentrate on paying your
bills on time, paying down outstanding balances, and not
taking on new debt.
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