OPEN NEW CREDIT CARD ACCOUNTS Obtaining additional credit cards increases your total available credit. Since credit utilization, or the percentage of your available credit that you have spent, is part of your score, it seems like lowering that percentage by increasing your total available credit would help your credit score. However, FICO states, this approach could backfire and actually lower your credit score. For one, opening lots of new accounts shortens the average age of your accounts, and a lower average age will generally lower your credit score. A better strategy is to add to your existing cards’ credit limits, and pay down existing debt while putting a freeze on credit card spending.
TAKE OUT A SMALL LOAN YOU DON’T NEED If your credit score is preventing you from getting the interest rate you want, you may be able to improve your score by taking out a small loan and repaying it as promised – in other words, by adding some positive activity to your credit history. Also, because installment loans add to your mix of
credit, if your credit history doesn’t already include this type of loan, obtaining one might improve your score.
USE RETIREMENT ACCOUNTS TO PAY OFF DEBTS Do you have piles of cash sitting around in a 401(k) or IRA that would wipe out your debt? It may be empting to use these accounts for just such a purpose, and technically, you could. Saving for retirement is a wise financial decision that you’ll thank yourself for later.