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Ten Facts You Need to Know to Build Your Credit

Working on improving your credit?  Boosting your credit can be as simple as understanding how a your credit score works and what to do to maintain good credit. 

1. Maintain a good credit score.  Credit scores can improve and change over time.
A credit score is a number assigned to you ranging from 300 to 850 that determines your creditworthiness when applying for credit.  Having good credit or a high credit score, can save you money when applying for a mortgage loan or credit card.  Lenders look at your score to assist them in making a decision whether or not to extend you credit and at what interest rate.  The good news is a low credit score does not have to follow you forever.  If you have a low credit score, work on improving your score by making timely payments, paying off debt and closing old accounts.
 
2. Delinquent accounts can remain on your credit file for 7 to 10 years.  
Negative accounts, including late payments, collection accounts, repossessions, tax liens, judgments and bankruptcies can remain on your credit report for 7 to 10 years from the date of delinquency.  The earlier you begin repairing your credit, the sooner you can start rebuilding your credit.  Older negative accounts will not affect your credit score in the same manner as a new negative account.

3. Inaccurate information can be removed from your credit report.
If you review your report and there is inaccurate information, under the Fair Credit Reporting Act (“FCRA”) you are entitled to dispute the inaccurate information with the credit reporting agencies and request the information be deleted from your credit file.

4.   Credit card utilization can help build your credit score.   
Credit card utilization is one of the most important factors used to calculate your credit score. You can figure out your utilization rate by dividing your total credit card balances by your total credit card limits.

5.   Making timely payments on your accounts can raise your score. 
Making all of your payments on time is the number one easiest way to raise your credit score.  If you are slow to submit payment try using the internet to set up auto-pay on your accounts, this can help ensure timely payments. 

6. Try not to carry balances on your credit cards.
If you are unable to make payment in full every month on your credit cards, try not to continue charging on the card so the balance doesn’t continue to soar.  Even making the minimum payment every month will affect your score, because the credit card companies will continue to assign late fees and interest on the unpaid balance.

7. Unpaid student loans can harm your credit.
Student loans are one of the types of debts that will remain with you for life.  Try to make payments on a regular basis and even consider paying off your loans early. 

8. Co-signing on a loan can affect your credit score.
While it may seem like the right thing to do, co-signing on a loan to help a relative or friend will affect your score.  If the loan holder defaults on the loan it becomes your responsibility and lenders will take this factor into account.

9. Credit inquiries can affect your score. 
Each time you apply for credit the lender will access your report.  Each access will affect your score and the more inquiries you have the more your score will be impacted.

10. Regularly review your report and score.
Pulling a copy of your report and score regularly will ensure its accuracy.  Knowing what is on your report at all times is the first step improving it.  You are entitled to one free copy of your report each year.  Order your copy at www.AnnualCreditReport.com

If you are in need of additional advice or assistance regarding your credit report, contact SmithMarco P.C. for a completely free case review.

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