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10 Tips to boost your credit score

A credit score is a numerical expression based on a statistical analysis of a person's credit files, to represent the creditworthiness of that person, which is the likelihood that the person will pay his or her debts in a timely manner. In the late 1950s, Fair Isaacs and Company was among the first companies to develop and implement credit scores. Hence, "FICO" became the popular acronym for their credit scoring system.

FICO credit scores can range from 300 to 900. The credit score is primarily based on credit report information, typically sourced from the three credit bureaus, Experian (www.experian.com), TransUnion (www.transunion.com) and Equifax (www.equifax.com).

FICO scores are important when shopping for a mortgage. A low score, such as 500, could result in much higher interest rates, points on your loan, or having your application rejected outright. Conversely, an 850 would get you the lowest rates, no points, and a low down payment.

Raising a low credit score will take time, because you need to prove that you can handle debt responsibly over time. Therefore, don’t expect that you can raise a 600 to a 700 in a matter of weeks.

Here are 10 tips to boost your credit score:

1. Pay your bill on time. Set up an automatic draft from your bank to the credit card company once a month for the minimun amount due by the due date. You can always send additional monies later during the month with a notation stating it should be applied to the outstanding balance.
   
   
2. Keep your balances low. If you have a credit card and the limit is $1,000 do not spend more than $500.00 or 50% of your cards limit.
   
   
3. Pay your bills in full. Please do not take 3 years to pay off a $2,500 credit card bill.
   
   
4. Do not close and old or seldom used account without opening a new one. In other words, the more credit accounts used wisely, the better.
   
   
5. Avoid the holiday shopping urge to open several new retail accounts at once – unless you can endure a short-term drop in your score.
   
   
6. Make sure your credit reports are accurate, since errors can lower your rating. Federal law allows each consumer to receive three free reports per year, visit www.annualcreditreport.com
   
   
7. Become an authorized user on an account with someone who has good ratings with that account.
   
   
8. Limit the number of inquiries. Don’t allow others to run your credit unnecessarily.
   
   
9. Get credit increases for accounts used often and paid satisfactory.
   
   
10. For people needing to raise a score in a hurry, consider “rapid rescoring,”which a mortgage lender reviews your credit reports and speeds through any corrections. A higher score can be generated in a matter of days.