We all depend on our credit when we want to make purchases, but I find that many people are confused about how to increase your credit scores, what affects your credit score, and what actions you should not take.


So here are some basic tips to use to help you with your credit score.


  • If you have a credit account that you no longer want to use, DO NOT CANCEL the account. Simply cut up the card and forget that you have it.  When you CANCEL an account, it acts as a big negative against your credit.  Strange, but true.  Just don’t use that card any longer and leave the account open, very simple!


  • Keep your balances to less than 50% of your total credit in each account. So for instance, if you have a $5,000 limit on a credit card, always do your best to keep the balance on that card under $2,500.  Having more than 50% of the allowable balance works against your credit score and can lower it substantially. 


  • If you have applied for a large purchase, such as a mortgage on a house, DO NOT BUY ANYTHING ELSE ON CREDIT! For instance, if you are waiting for approval on a mortgage, don’t go out and buy a car!  I literally had a client that did this once, and it totally made it so that he could no longer buy the house he wanted!  Just wait until after you close on your house, and then make those other purchases. 


  • Several inquiries on your credit in a short amount of time will lower your credit score. Now, don’t panic, because in order to get credit, your credit HAS to get checked.  One or two credit inquiries will not lower your score.  But it is when you have several that your score will suffer.  This is not a big hit, maybe a few points, but it is something to consider if you have marginal credit required for a purchase, such as a mortgage.


  • The best way to improve your credit score is to open three new accounts, use them for purchases you would normally make, like for the gas in your car, and then pay them off totally each month. If you did this for six months, your credit score would be greatly increased.  Now this does not eliminate any derogatory accounts, but it will raise your credit score.


  • Always do your best to make your payments on time. When you don’t, not only will your credit score suffer, but you will most likely see interest rates soar to the highest heights of interest possible!  That alone can make your payments out of reach.  So be sure to make your payments on time. 


  • If you get into trouble on an account, (or more than one) call the company that you have the debt with. It always helps to let them know you are in trouble and to see if there is any way that they can arrange to help you catch up, or to make your payments.  You may be surprised that they are willing to work something out with you.  More communication is ALWAYS better than less!


Being wise about your credit scores can turn out to be a very valuable asset for you in life.


 I wish you all the best in 2016 – hopefully this will be a very prosperous year for you!