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Financial Literacy - Credit scores
5 tips to improve your credit score
Learn strategies for fixing a less-than-perfect credit score with a little time and elbow grease
Credit scoring, demystified

5 tips to improve your credit score

If you've pulled your credit score and are disappointed by what you see, here are some simple things you can start doing now to improve your score. Credit counselor Bruce McClary of Richmond, Va., suggests these five ways to boost your credit score.

5 ways to bump up your score
Step away from the edge
If you think you're doing everything right, take a look at the amount of your outstanding debt and your debt-to-credit ratio. Reducing your credit card balances will score you points and is especially important if you are flirting with the limit on any of your cards.

You never want to be maxed out, and ideally you'll be using only about 40 percent of your limit on any one card. Spreading debt between cards is better for your credit score than keeping it all in one place.

Next, focus on the amount of outstanding debt (30 percent of your score). Together, outstanding debt and payment history account for 65 percent of your score. Pay off your debt rather than moving it around. "A lot of people like to play the balance transfer shell game. Closing out an account and transferring that over means that you're increasing your debt ratio. You're reducing the overall amount of available credit and driving up the balance on the other," says McClary. Ultimately if the credit limit is equal or higher on the new card, it would be a wash over time, but in the short term, this is not smart.

Tip: Discover 6 ways to get control of your cards.

 Does your credit get high marks or do you feel like
you're flunking out? Share your story.
-- Posted: June 18, 2007
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