Credit Scores 101

According to Money Magazine, the following techniques will help improve your credit score:

• Pay bills on time, including rent which is now included in credit reports. Automating payments online can help. They can also help save time.
• If you are considering taking out a loan such as for a mortgage or to buy a new car, and want to rate shop, do it within a two week period. Multiple requests about a new loan could lower your score. However, multiple requests during a short period of time do not count as the kind of multiple requests that hurt your score.
• Do not let existing credit cards go dormant. A lack of activity lowers your score. Charge something small each month, and then pay it off.
• Keep balances on credit cards and other revolving accounts below 50% of your credit limit. Lower is better.
• Do not open unnecessary new accounts. (While new accounts can affect your credit score, they can also provide cash to pay medical or other expenses. From our perspective, for people who don't have a cash reserve, knowing you have access to credit when you need it outweighs the effect on your credit score).

You can find techniques to improve your particular score at www.CreditKarma.com . While the site is free, expect to see ads. Also note that the monitoring service is based only on TransUnion's database. It does not include the other credit bureaus which should also be monitored.

NOTE: If you haven't reviewed your credit report lately, this is a good time to do it. You can request a free copy from each of the three major credit-reporting agencies at www.annualcreditreport.com , Tel.: 877.322.8228. Be sure to review the reports and ask for a correction of any incorrect entries. 

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