With today's economic turmoil it is easy to understand why more and more Americans are accruing debt. Consumer debt in the U.S. is rapidly approaching $3 trillion with roughly 37% of that figure representing revolving credit (credit cards). As these staggering numbers continue to grow it is easy to see why consumer lending has slowed down.
Today, more than ever, it is critical to control your debt and keep you credit score as high as possible. One never knows what the future may hold and when they may need to utilize credit. StarReviews offers these seven tips to help you improve your credit score.
1. Get a Copy of Your Credit Report and Monitor It - There are three major credit - reporting services, TransUnion, Equifax and Experian. It is important that you keep track of all three of these to make sure everything contained within them is accurate. Websites like credit.com and FreeCreditReport.com offer low monthly subscriptions for access to your credit reports as well as additional services.
2. Stop Using Your Credit Cards - Aside from the obvious fact that you should stop accumulating debt, 30% of your total credit score is based on the ratio of your debt to your credit limits. The more available credit you have, the better your credit score. So stop piling on the debt and kill two birds with one stone.
3. Get and Stay Current on Your Current Debts - Nothing can impact your credit score more than making sure you are paying your bills on time. Your payment history accounts for 35% of your credit score. If you must be late, make sure you get your payment in no later than 30 days past the due date.
4. Leave Older, Established Credit Cards Open - Many people are tempted to close out an old account once it has been paid off. This is actually a mistake. Since 30% of your credit score is based on your available credit ratio, keeping older accounts open helps your score. In addition, 15% of your score is based on your credit history. So keeping older accounts open provides yet another boost to your overall score. Cut up that old card and never use it again, but keep that account open.
5. Don't Open More Credit Accounts - Over extending your credit is how you got in over your head to begin with. Opening more accounts is not the answer. Additionally, credit inquiries and application declines can only further decrease your credit score.
6. Try and Increase Your Credit Limits - You are not increasing your credit limits to take on more debt but to help boost your debt to available credit ratio without having to apply for new credit lines. A quick inquiry to your credit card company could possibly provide a fast boost to your score.
7. If Necessary, Get Professional Assistance - If you feel like your debt has become completely overwhelming you can look for professional help. Credit counseling and debt consolidation services like careonecredit.com and credit.com may be able to help you manage your current situation. This is a viable option and should definitely be investigated as an alternative to filing bankruptcy.
If you would like to learn even more about how you can improve your credit score as well as overall finances, we recommend take a look at Suze Orman's 2009 Action Plan. It covers how our choices can affect our credit score, things to be aware of when utilizing our credit, and how to successfully deal with our finances in 2009.