Raise Credit Score – Two Tips

If you are cleaning up your credit report then you understand the importance of your credit score. Your credit score can impact your lifestyle more than by how much money you make.

With a bad credit score you may be having employers turn you away from a job. You may be unable to purchase a home or get approval for an auto loan or a credit card. On occasions when you are approved it is at sickening interest rates.

If you learn how the credit system works than you can use that knowledge to better your credit score. With a higher credit score you will be able to make the purchases you want or have extra money because you are not spending it on high interest rates.

When credit bureaus compute your credit score they use an algorithm or equation. They input your credit history and a computer calculates your credit score.

Your credit score is a way for lenders and employers to measure you. Lenders will often not look at any other factor other than your credit score when you apply for a credit line. You credit score determines how the credit world perceives you.

How do you use the credit system to your advantage? There are two factors that carry more weight than anything else in the credit system equation.

1. Remove negative accounts. Negative accounts on your credit report will do the most damage to your score and need to be removed.

2. Keep an unsecured revolving line of credit. This can be done by almost anyone.

The actual credit bureaus algorithms are protected and not released to the public. However upon review of thousands of credit files it has been found that having an open account is almost as important as removing negative credit items.

The unsecured line of credit will improve your credit score because:

1. Every time you pay your bill you are creating positive payment history. Just so you know the credit bureaus like this account to be aged or open for some time.

2. Improves your debt to credit ratio. The credit bureaus reward people who have high available credit and low outstanding debt.

Your open credit line will carry more influence on your score if it is unsecured. However if you can not be approved for an unsecured loan then I would suggest a secured credit card.

A credit line will help build credit however it is most important to remove bad credit items. If you are unable to get approval for new credit immediately and don’t want a secured credit line then remove bad credit and then reapply.

It is possible for everyone to achieve a 700 credit score for themselves. So start today and erase the derogatory marks and build positive marks on your credit report.

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