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Increase your credit score with these tips.

Your credit score is one of the most critical 3 digit numbers in your financial life. It is the number that most financial institutions use to determine your credit worthiness, your buying power, your ability to pay back loans, and more. Looking to get a new cell phone plan? How about a new car or even an apartment to rent? Your credit score doesn’t only determine your ability to get a credit card or mortgage but can affect many of your daily purchases. Your credit history when pulled by a company shows not only the status of past and present debts but also your 3 digit score.

In order to increase your score you’ll need to check your score. The federal government allows every citizen a free credit report through one of the 3 credit reporting bureaus once every 12 months. These include Equifax, TransUnion, and Experian. Each offers advanced and full credit reporting services, but for the free one you can simply look for the link to the free required by law report to get your basic credit history. Sometimes you can get your score for free with the report so read the fine print first, other times they will charge a small fee to see the score as well, but generally you can get the score with the report.

If your score is above 730 then generally you don’t really have to worry too much about increasing it, but rather maintaining it. Scores range from the mid-300s to the mid-800s. Any score below 670 will limit your credit gaining abilities, and scores below 585 are considered poor and not credit worth. Scores between 670-730 are considered average but you’ll want to aim for a score above 730.

Now that you know your score you can work on increasing it and limiting any decreases to it. The best way to increase your score is to build your credit history; this can be done by using your credit card responsibly and using no more then 30% of your available credit at any given time. The more available credit you use can signal a need for extra money and lower your score a bit. If you have 3 credit cards with a combined credit line of 15,000 dollars and you currently have 10,000 available then you are using 5,000 or 33% of your available credit. Responsible use of your credit cards can increase your score and you must be sure to pay off your balance in full each month, never miss a payment, and never exceed your limit.

However the focus to eventually increase your score starts with limiting doing things that decrease your score. Things that decrease and lower your score include applying for a new line of credit (loans, credit cards, car loans, mortgages), a hard credit inquiry on your credit history (a financial institution or company checking your credit worthiness may pull your credit history), missing payments, exceeding your limit,and defaulting on a loan or debt. These are the most common things that lower your credit score, with the last 3 items being the ones that cause the most damage to your credit. The other items will lower your score only a few points and your score will eventually recover.

Some credit card companies have come under fire lately for monitoring cardholders’ spending habits and then raising or lowering their interest rates, and credit limits accordingly. Some companies have been caught changing terms of use and credit limits for spenders who use their cards to buy what the card deems risky purchases, frivolous purchases, or irresponsible purchases. Of course that determination is up to the person making the purchase and while a card company is within it’s rights to extend or revoke credit, doing so to a responsible cardholder doesn’t make much sense. Either way, this action of lowered credit limits can make your available credit lower, thus making your used credit percentage higher which in turn lowers your score.

While you generally don’t need to consider every purchase as a potential credit score ding, you should plan ahead when considering a new line of credit, a car loan, or a mortgage. These applications for new credit will lower your score a few points for a while, and defaulting on any of these loans can cause your score to drop 50 points or more. This blow to your credit score can also come from skipping on cell phone payments, rent payments, student loans, and more.

The best way to increase your credit score is to apply for some credit, use it in a responsible way, and never spend more then you make. If you use credit cards to build credit be sure to read your card-member agreement each month to look out for sudden changes, know your credit limit and use less then 30% of it at a given time, pay your bill in full, and don’t open too many accounts at once.

Changes to your score generally occur at the end of the month when credit companies report to the 3 credit agencies and most small decreases will disappear in as little as 3 months bringing the score back up again. Responsible use and responsible borrowing will help build and maintain your credit as there is no quick fix to increasing a low score.