Golden Road Credit Services Inc.

Most of our clients come to us for help improving their credit situation without knowing that their first step should be to learn how to maintain a good credit standing. Managing credit responsibly over time is the best advice we can give them. These are basic but fundamental tips to follow:

Payment History Tips

• Pay your bills on time.
  Delinquent payments and collections can have a major negative impact on your score.
• If you have missed payments, get current and stay current.
  The longer you pay your bills on time, the better your score.
• Be aware that paying off a collection account will not remove it from your credit report.
  Although the account will appear on your report as a paid collection, it will stay on your report for seven years.
• If you are having trouble making ends meet, contact your creditors. Most financial institutions will allow certain flexibility before negative information is reported. Speak to them to request extensions on payment due dates or lower settlement amounts.
  This won't improve your score immediately, but if you can begin to manage your credit and pay on time, your score will get better over time.

Amounts Owed Tips

• Keep balances low on credit cards and other “revolving credit”.
  High outstanding debt can affect a score. Your score will be reduced the most of your balances are on average higher than approximately 30% of your total available credit on all your revolving accounts.
• Pay off debt rather than moving it around.
  The most effective way to improve your score in this area is by paying down your revolving credit. In fact, owing the same amount but having fewer open accounts may lower your score.
• Don't close unused credit cards as a short-term strategy to raise your score. This will reduce your available credit making your balances to available credit ratio higher.
• Don't open a number of new credit cards that you don't need, just to increase your available credit.
  This approach could backfire and actually lower score.  New accounts do not help your credit score until they have some age and history behind them.
  

Length of Credit History Tips

• If you have been managing credit for a short time, don't open a lot of new accounts too rapidly.
  New accounts will lower your average account age, which will have a larger effect on your score if you don't have a lot of other credit information. Also, rapid account buildup can look risky if you are a new credit user.

New Credit Tips

• Do your rate shopping for a given loan within a focused period of time.
  Looking for a mortgage or an auto loan may cause multiple lenders to request your credit report, even though you are only looking for one loan. To compensate for this, the score ignores all mortgage and auto inquiries made in the 30 days prior to scoring. So if you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping. In addition, the score looks on your credit report for auto or mortgage inquiries older than 30 days. If it finds some, it counts all those inquiries that fall in a typical shopping period as just one inquiry when determining your score. For credit scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For credit scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the credit scoring formula it wants the credit reporting agency to use to calculate your credit score.
• Re-establish your credit history if you have had problems.
  Opening new accounts responsibly and paying them off on time will raise your score in the long term.
• Note that it's OK to request and check your own credit report.
  This won't affect your score, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers.

 

Types of Credit Use Tips

• Apply for and open new credit accounts only as needed.
  Don't open accounts just to have a better credit mix - it probably won't raise your score.
• Have credit cards - but manage them responsibly.
  In general, having credit cards and installment loans (and paying timely payments) will raise your score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.

Note that closing an account doesn't make it go away.
A closed account will still show up on your credit report, and may be considered by the score.