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As mentioned in a previous blog article, your credit score is not as important as many make it out to be. It is not the only factor considered when applying for a loan. However, if you are trying to increase your credit score to put yourself in a better borrowing situation, follow these three steps:

1) Pay on time.
It sounds obvious, but still needs to be emphasized. The reality is, 35% of your credit score is based on the timeliness of your payments. And there is an even heavier weight on recent (within 12 to 24 months) payment history. As a result, if you are trying to increase your credit score, you must have a heavy emphasis on paying on time, every time.

2) Keep revolving debt balances as close to $0 as possible.
Revolving debt is categorized as debt that has a moving balance. Credit cards, lines of credit, and home equity loans are debt instruments that allow you to increase a balance by making additional charges—they are not fixed debts. Their balances can “revolve” or change on a daily basis. 30% of your credit score is based on the balances of your revolving debt. A great way to increase your credit score is to pay down the revolving debt balances and keep them as close to $0 as possible.

3) Pay off past-due debts.
If you have any past-due debts, get them paid. This goes for collections, judgments, or open accounts that have recently missed payments. As mentioned before, a large percentage of your credit score is based on timely payment, but what cannot be ignored is reconciling debts that were not paid on time.

Stewardship does not offer credit repair as a service or act as an advisor to get your credit fixed. However, our professional experience in financial services gives us real-world experience to validate the above steps.

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