With changes to bank policies and fees, many Americans have seen changes in their credit scores. If you’re asking “how to improve my credit score?” you are not alone. Many people saw a downturn in their score. Here is a really basic tip on how to improve your credit score.
When you’re applying for credit today, getting a store credit card is the kind of card that’s easy to get, but that you may not use all the time. Once you apply, you may forget about even having that card, if you don’t shop at that store frequently. Yet that open store card account appears on your credit report while it’s still an open account. When you have lots of these types of unused accounts at various stores, you may damage your credit since it looks like you have too much available, and could get overextended. Lenders don’t like to see a lot of available credit you never use.
It’s also true that having many credit card accounts you don’t use can lead to a risk of forgetting bills, and forgetting to make payments on those accounts. Having these kinds of lingering debts can also hurt your credit score. You never want to have a bill go unpaid or be late in any way, if you’re trying to raise your credit score to a higher level. It’s a good policy to only keep open those accounts which you know you will use, and make sure you pay those on time. Close other accounts that you do not use, or do not intend to use. When you have a manageable number of accounts, that means you can more easily keep track of what you need to pay each month, not to mention keeping your payments affordable. You can improve your credit score by closing some of these accounts, and paying the remaining accounts on time.
If you do have one of these accounts that has become delinquent, even if you close the account the history will still appear on your credit report. That’s why it’s so important to make every payment on time. You may also see a slight drop in your credit score when you close an account, because your existing balances are a bigger percentage of the remaining accounts you have open. Don’t worry about this too much, but just keep paying down balances and your score will come into line too.
As an example, if you start out with a total of $4000 in credit, with a balance owed of $1000, but you close two cards and reduce your available by half, owing $1000 on a card limit of $2000 looks worse than owing $1000 on a card limit of $4000. Just keep paying down your balances, make your payments on time, and soon your balances will get below $500 and your credit will improve.
