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Raising that Credit Score

Okay so your score is below 700? Not to worry - we can fix that!

There are a few things to know about credit scores.

The single most important piece of information is this: Pay off your entire credit card balance before the due date. Every month. For every card.

You don't need to concern yourself with minimum payments and interest, etc. If you charged $2679 to your credit card in that billing cycle, you will want to pay $2679 on or before its due date. I strongly recommend setting up automatic payments so you don't even have to think about it. You don't want to miss a payment because that can decrease your credit score. Don't spend more $$ on your card then you can pay off every single month.

The second most important piece of information is this: You will want to keep your oldest account open. Did you open a credit card when you were in your 20s at Gap or Macy's and you barely use the card but you still have it in a drawer somewhere? Great! Don't close it. Your credit score is affected by how long you have been using credit, so keep your longest one open to keep your score up. [And you only need 1 open so if you have a bunch of credit cards from a long time ago you can close the other ones if you want, just keep the very oldest one open].

So -- what does affect credit scores?

1) Payment history (So yeah, again - just pay the whole thing off on time. Always.)

2) Credit utilization (This is a fancy way of saying that you want to have more credit than you use, meaning that you want to spend a little bit on a bunch of cards rather than spending a lot on just a single card - this shows the credit card companies that you are responsible with money and can pay it back, so you actually want to be using like ~3 credit cards on rotation at any given time, not just 0 or 1)

3) Credit history (Reminder: keep your oldest card open)

4) Account inquiries -- Each time you apply for a credit card (or a loan or whatever), that company will check your credit score to make sure it is good enough for them to give you the credit card or loan. If this happens over and over, it can drop your score a tiny bit so this will only matter if you are teetering around the 700 mark. If so, you will want to try to raise your score a bit. But if you are in the solid 700s or in the 800s, it literally doesn't matter. It will only be on your credit report for 2 years and only impacts the score (slightly) for 1 year. So having 3-5 credit inquiries in a given year is not an issue.

So in fact, applying for credit cards and building that credit will actually increase your credit score!! Mine has gone up from the 700s to the 800s after doing this for a while!

If you are below 700, you will want to keep doing steps 1-3 until your score has improved a bit and then you can start applying for these cards. Note: If your score is low because you accidentally forgot to pay your card / thought you had turned automatic payments on but turns out you didn't, etc then you can always contact the credit card company and ask forgiveness - this sometimes works.

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