Your credit score can be a fickle beast. Many people aren't even aware of the factors used to calculate their score, and thus never take the appropriate steps to improve it. But a good credit score doesn't just open up purchasing opportunities; in fact, it can mean the difference between the lowest possible interest rate and one that's exponentially higher.
Whether you're looking to finance a car, home or other major purchase, take a look below at the four ways you can repair your credit:
Crunch Some Numbers
Doing a little research never hurt anybody, and in this case it might save you a whole bundle of cash. For example, if you're looking to purchase a new home in a few years, start taking note of how exactly your FICO score is calculated.
Different factors carry different weights: payment history is weighted at 35%, available credit at 30%, the length of your credit history at 15%, and the type of credit and number of inquiries at 10% each. The age of each of these factors is also weighted, with newer information weighing more heavily than old.
Don't Spend The Card Limit Every Month
If once in a while an emergency arises and you're forced to max out your card, don't worry about it. Assuming you pay it off immediately, the one-time purchase won't come back to haunt you in the long run. However, spending your card limit every month definitely hurts your FICO score more than it helps. Try to spend no more than a third of your card limit every month, if that.
Raise Your Credit Limit
Only ask your credit card company to raise your limit if you have a proven track record of fiscal responsibility. The worst thing you can do is try to increase your monthly limit from, say, $1,500 to $3,000 just because you want to make a new purchase or can't already pay your bills. If, however, you maintain responsible borrowing habits on a card with regularly increasing limits, it can prove to be a huge boon to your credit score.
Automate Your Regular Payments
Sometimes life can get so hectic that even remembering to pay the bills falls by the wayside. Automate your regular payments such as utilities to insure that all your bills are paid on time and in full. Even one late payment can make an ugly dent in an otherwise stellar credit score.
To learn more, contact a company like Nationwide Credit Repairs with any questions or concerns you have.