Improve Your Credit

A good credit score is a tremendous asset when it comes time to purchase your home. Often it means you'll be able to borrow more, and that you'll qualify for many different kinds of programs. And it almost certainly means that the interest rate you'll pay will be lower. This article goes over some of the DOs and DON'Ts of getting a good credit score.

• DO:  Make paying off your debts on time your number one credit-related priority. The single most important factor on your credit score is your payment history. If you have late payments now, pay them down first, and make it a goal to pay on-time, every time in the future.
   
• DO:  Try to pay down your existing balances, if you can do so while keeping enough cash to pay off your existing debts. Another important factor in your credit score is the amount of debt you currently have.
   
• DON'T:  Close out existing credit accounts that are paid off. It can be tempting to close out older accounts so you "won't get into trouble again", but you're better off cutting up those credit cards and discarding them than actually closing out the account. Here's why: one of the factors in your credit score is the length of your credit history, including the length of time that your accounts have been opened.
   
• DO:  Order a copy of your credit report and understand what's in it. (Checking your own credit does not harm your credit). Some resources for this are TrueCredit.com, FreeCreditReport.com and MyFico.com. When you do this, be sure to order reports from all three of the major credit reporting agencies (Equifax, Transunion, and Experian).
   
• DO:  Check your report for errors and inaccurate infromation, and contact the reporting agency in question to make the necessary corrections.
   
• DO:  If you're young or otherwise have a short credit history, open an account to establish your credit. Do not open too many accounts, however, as too many new accounts can be a red flag on your score.
   
• DON'T:  Fall victim to credit "clean-up" scams. No one can magically cure your credit score, and you can correct inaccuracies yourself. On the other hand, reputable advice from a legitimate credit counselor or attorney may be helpful.
   
• DON'T:  Expect instant results. Your credit score can be improved given time and the right decisions on your part, but there are no instant fixes.