Credit advice 1

Keep track of your payment history. You credit score is largely determined by your payment history.

Here are some tips for improving your payment history:

  • Don’t miss a payment
  • If you are unable to pay the full amount, at least make the minimum payment
  • When you are having trouble paying a bill, call the lender right away
  • Do not skip a payment even if the bill is disputed
  • Make good use of credit
  • Make sure you don’t go over your credit limit.
  • Try not to exceed the $5,000 credit card limit on your card. Overspending on a credit card can lower your credit score.
  • Keep your credit utilization below 35%. Having a high credit limit is better than using less of it each month.

Here are some examples:

  • An average borrow amount of $1,000 and a $5,000 credit limit equals a 20% credit usage rateAn average borrowing amount of $500 on a credit card with a $1,000 limit is 50% of the credit limit
  • A person who uses a lot of credit will be viewed as a greater risk by lenders. No matter how much you pay by the due date, this still applies.
  • Calculate your credit usage rate to determine how best to use your available credit. Adding up all of your credit limits is an easy way to do this.

Included are:

  • Visa and MasterCard
  • A credit line
  • Borrowings

Your credit score will improve if you have used your credit account for a long time. When you have relatively new credit accounts, your credit score may be lower.
Transferring an older account to a new account counts as a new credit.

Don’t apply for or check your credit too often

From time to time, it’s normal and expected that you’ll apply for credit. A credit bureau records an inquiry when lenders or others request your credit report. This is called a credit check.

Lenders may assume if you have too many credit checks on your credit report.

  • Trying to obtain credit urgently
  • Spending more than you can afford
  • Controlling how many credit checks are performed
  • Keeping your credit report free of credit checks:
  • Do not apply for credit more than once
  • Shop around for a car or mortgage within two weeks of getting quotes from different lenders. Your credit score will be affected by all of your inquiries combined.
  • Don’t take out a loan unless you really need it

The difference between “hard” and “soft” hits:

A “hard hit” is a credit check that appears on your credit report and affects your credit score. These inquiries are visible to anyone who views your credit report.

The following are examples of hard hits:

  • Applying for a credit card
  • Applications for rental properties
  • Applications for employment

The term “soft hits” refers to credit checks appearing on your credit report, but only you can view them. Soft hits have no effect on your credit score.

The following are examples of soft hits:

  • You can obtain a credit report yourself
  • When a business requests your credit report to update their records about your existing account
  • Different credit types can be used
  • You might have a lower score if you have only one type of credit product, such as a credit card.

Having a variety of credit is better, such as:

  • Card with a credit limit
  • Loans for cars
  • Credit lines

You may be able to improve your credit score by combining credit products. If you borrow money, make sure you can repay it. Take on too much debt otherwise, and you may end up hurting your credit rating.

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