Your credit score and report are very important when it comes to securing financing. Should you ever need a loan to purchase a car, home or further education, both your credit score and report will be viewed. Many are under the impression that simply paying your bills on time each month is all you need to maintain a good rating on both. Responsible management will help, but there are several other factors that influence both your credit score and credit report.
Paying off and closing credit card accounts can actually reflect poorly on your credit report and lower your score. Closing accounts can make your credit history look younger than it is. Your credit score is partially determined by your oldest account and the average of all your accounts. If you close an old account, your report history will look younger and your score could go down, which could reduce the amount of credit available to you.
The best way to improve both your credit report and score is to make timely payments to each of your accounts. However, if you have suffered financial difficulty, getting help from a debt counseling service or credit repair agency might help your situation. A lender may require you to pay down the balance on some accounts before the give you a new loan.
Information regarding negative payment history will remain on your credit report (and affect your FICO score) for seven years, with the exception of bankruptcy, which stays in place for 10 years. You can contact credit bureaus if incorrect information appears on your report. Many companies offer to improve your FICO number for a fee. Don’t be fooled. Good credit has to be earned.
