Credit Score: Keeping Debt To A Minimum Can Help

Credit Score: Keeping Debt To A Minimum Can Help
Today we are more dependent on our credit scores than we
realize. This magic number quite often is the deciding
factor in if we can buy a house, car or get that all
important student loan.

The higher the credit score the better off your are
financially in terms of getting loans. Those with low
scores may still get financing but they will be forced to
pay much higher rates of interest and charges than those
with higher scores.

Those with low credit scores have two choices. The first is
to accept their position and pay up for their credit. The
second is to do everything they can to raise their score.

Your credit rating and score is established over time. If
it is low, it didn't get there over night. Raising it up is
going to take some time as well. Keeping your overall debts
low will actually help to raise your score.

Some are under the impression that to get the highest
possible credit score you need several maxed out accounts
and you need to make the monthly minimum payment. This
isn't only untrue it is dangerous.

Everything is fine as long as you are paying but if
something should happen to change this then you can get
into trouble.

In establishing your credit rating, the agencies look at
something call credit to debt ratio. If your cards are
maxed out or close to their limit then this can lower your
scores.

You also need to avoid the trap of moving debt from one
card to another. This only helps if it is necessary and
interest rates are lower. Doing this tells credit companies
that you cannot pay your debts. If they see balances moving
but not falling then this puts up loads of red flags.

Try to leave accounts open that have zero balances. It may
seem pointless but it can actually help to raise your
score. This shows that you can control your spending if you
have an open account with a low or zero balance.

Finally, don't try opening new account to decrease your
debt to limit ratio. This will backfire and have the
opposite effect. Better to pay down the debt you have and
stay current.

Your credit score is vitally important to your financial
future. However, if your score isn't what it should be,
things can change. Pay down debt and get your ratio lower.
This will help immensely and lower the overall risk to you.

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Jim Moore comes from a background in engineering and
financial services software. Jim has spent the last 20
years as a professional writer working for some of the
world's largest engineering and financial companies.
http://www.improveyourcreditscoring.com