When a person takes out a loan or attempts to establish a line of credit, he or she needs to have a good credit score. Your credit score, which is determined by factors like payment history, amount owed, and the length of your credit history, is one of the determining factors in how lenders will respond to your application. A good score is vital to building good lines of credit and being able to take out large loans. The following are several tips for improving your credit score.
- Pay your credit card bills. Outstanding credit will lower your score very quickly, and will dissuade any potential creditors. Pay off your credit card bills every month to show responsibility and raise your score.
- Use your credit card. Have at least a small balance on your card every month, if only to raise your score. By using credit and continuously paying it off, you’re more likely to be approved for a loan.
- Keep your balances low. While your score will favorably reflect usage, the best score is achieved by keeping your ratio of available credit to credit used as low as possible.
- Keep the number of active balances low. If you have multiple cards, don’t make multiple small purchases on each. Not only does this raise your chances of forgetting to pay a monthly bill, but it can hurt your score.
Follow these tips to be approved for loans and establish good lines of credit. If you become overrun by credit card debt, consider talking with a Bryan bankruptcy attorney for advice.