Discipline, time key to raising your credit score
A low credit score can stand in the way of buying a house, new car or even getting a new job, and if your score isn't what it should be, there are some ways to boost it.
Credit card and loan approvals, car and home insurance rates, interest rates and the amount you pay for rental and utility deposits can all be dependent on your three-digit credit score number.
Dyalekt Capalad figured that out when he and his wife tried to buy a house. A credit score he hadn't checked in years came back to haunt him.
"I never had any reason to think it was bad," he said.
"It was basically in the 500s," his wife Pamela Capalad said.
The bank wouldn't approve a mortgage loan so the Capalads began the credit repair process.
"Depending on the reasons for a low credit score, it can take months or even years to raise a low score to a good score – say 700. It also takes discipline," said Tobie Stanger, Consumer Reports money editor.
Dyalekt Capalad's credit score problems started with a student loan that was in collections.
One of the most important things to do to boost your score is to pay all your bills on time! Timely payments account for about 35 percent of your FICO score, the most common credit scoring system.
Consumer Reports suggests that you pay off your credit card each month. When that isn't possible, they advise keeping any balance to no more than 10 percent of your available balance. Anything more could show elevated credit risk.
"Another tip is to consider taking out a personal loan to pay your credit card debt. Having a greater variety of credit types might help your credit score. Plus you may get a lower rate of interest with the loan," Stanger said.
If you don't qualify for a traditional credit card because of your credit history, Consumer Reports suggests using a secured credit card that requires a deposit. Make timely payments on it and your credit score should improve.
Finally, keep track of your credit by requesting a free credit report once a year from each of the three reporting
agencies: Experian, TransUnion and Equifax.
