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Boost your credit score
By Adam | April 25, 2007
Boost your credit score
Q: Will closing existing credit accounts hurt my credit score? How long do negative marks stay on my report and how do I get rid of them? Is there an easy way to raise my score?
A: Whether you should close your accounts depends on your situation. Negative marks stay on your credit report for seven years. And there’s no quick fix to improving those credit scores.
Dr. Utter had not used several of his accounts in a while, and like many other readers wondered whether he should close some of them out.
“Sure, if you’re going to feel a lot more comfortable by closing out some,” said Craig Watts, a spokesman for Fair Isaac Corp., which pioneered the FICO score.
But if you do, many financial advisers recommend keeping the oldest accounts open, since your credit score is partly based on the length of your credit history.
Hang onto the credit cards that you opened in college and have consistently paid on time since that shows a positive credit history.
“Credit score is an attempt to show how well you manage credit.
Having 5 to 10 (accounts) isn’t a bad thing,” said Charlie Helms, CEO of Credit Counseling Northwest.
But it may make sense to close some accounts if you have excessive amounts, like 25 or more.
Your credit score will be pretty good if you manage between four and six credit cards, pay them on time, charge no more than 35 percent of the limit and keep balances on them, said Steven Katz, a spokesman with TransUnion’s TrueCredit.com.
“It’s not so much the number of cards, it’s more how close you are to using the total credit,” he said.
Your score is based on your payment history (do you consistently pay your bills on time?), your utilization rate (how much of your total available credit are you using?) and your balance (have you maxed out your card or are you delinquent?), Katz said.
So how do you raise your score, especially after having credit problems?
“It’s a little like lowering your cholesterol level,” Watts said.
“There are tried and true simple ways to help out, but they’re invariably longer term.”
First, get your credit report and review the report for accuracy.
Finding and correcting errors is one of the simplest ways to raise your score, Watts said.
It usually takes the agencies around 30 days to respond.
Second, to the extent that you can, pay down those credit card balances.
“Paying down those high balances will produce a quick rise,” Watts said.
Negative marks stay on your credit report for seven years, but Hadid had not seen any change even though her credit problems happened eight years ago.
If negative marks aren’t automatically removed from your credit report, contact the agencies and request that those remarks be removed.
Beware credit repair programs that promise to fix your credit overnight while charging you high upfront fees.
“If you really have damaged credit, there’s no quick fix,” Helms said.
But it shouldn’t take more than two years of steady, good payment history before you are eligible for competitive interest rates.
Creditors want to see a point where bad credit habits end and good credit habits, like paying bills on time and avoiding opening new credit lines, he said.
Consumer Smarts: Treat your accounts wisely to boost your credit score (Seattle Post-Intelligencer)
Love it or hate it, your three-digit credit score often dictates what kind of car loan, mortgage, even auto insurance you get. Here are some things you need to know.
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