Improve Your Score by Managing Your Credit

Manage your credit for the LONG RUN. In the long run, your scores will be determined by time and good financial behavior which should include the following:

• Pay your bills on time. Late payments and collections can have a serious impact on your credit score.
  
  
• Reduce your credit balance. If you are “maxed” out on your credit cards, your score will be low. Try to keep your credit card balances below 50% of the available limit. EXAMPLE: It’s better to have two credit cards with $10,000 limits where you owe $5000 on each than to have one credit card with a $10,000 limit that is maxed out.
  
  
• Do not apply for credit frequently. A lot of inquiries will give the appearance you may be taking on more debt than you can afford. Each inquiry can cause up to a 5 point drop in your credit score. The actual amount of damage depends on the number of inquiries, time period and other factors in your credit file.)
  
  
• Don’t close any old accounts. Your credit score is largely determined by the length of your credit history. Closing older accounts can make your credit history look younger than it actually is, which can hurt your score.
  
  
• Avoid over-consolidating. If you consolidate your credit card balances onto one low rate card and the balance on that card goes over 50% of the high credit limit, your credit score will go down.
  
  

Building a good credit history over time - by paying bills promptly, establishing a variety of accounts, and keeping balances below 40% of your credit limits - is the best strategy for having and maintaining excellent credit.