Ways To Improve Credit

A drop in interest rates next year would be good news for those Americans who are racking up big credit card bills this holiday shopping season. Big bills can harm your savings accounts, but you'd might be surprised what they can do to your credit rating. Ray Hennessey, editor of SmartMoney.com, offers five quick ways to improve your credit score.

First, ask your credit card company to increase your credit limits. The more available credit you have, the better it is for you. If you have $15,000 in credit, call and have them extend it another $5,000. Hennessey reminds you should go ahead and spend the extra credit, it just looks good to have it.

Secondly, be an early bird when it comes to making payments on the credit card. "As soon as you get the bill make out that minimum payment," Hennessey says. "This is less money that is building up and again you have the more available credit.

Also, use those old credit cards occasionally. You might have an old department store card you don't use anymore. It doesn't count towards your credit report if you don't use it. Use it once or twice to keep it active and then pay it off in full right away. You should never use only one card.

Another way to improve your credit report is a technique called piggy-backing. "If you have a family member, say a parent or grandparent who's got good credit and a lot of available credit on a card, ask that member to be put as an authorized user on the card," Hennessey explains. This will count towards your credit score.

Finally, remember your utility bills. We tend to pay our utility bills last when we are in a pinch because the services are so hard to turn off. "But these guy are some of the most aggressive reporting the credit agencies," warns Hennessey.

And remember, your credit rating changes every time you make a purchase, so stay on top of it.

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by Jenn Eaker