"Be Better Prepared and Learn the Top Five Sure Fire Ways to Raise Your Credit Score! Based Off Of the Credit Score Breakdown."
Ways To Improve Your Credit Score: Part 4 of 4
« Read Part 3: Credit Score Breakdown
Based on what we know and can reasonably assume on the FICO credit score formula, follow these simple guidelines and you’ll be well on your way to improving your credit score:
Always pay your bills on time. This means ALL your bills, not just credit cards, but your utilities, rent, etc. The way credit reporting companies know that you’ve been late is when your creditors submit it to them. So make sure your creditors are happy by not paying anything late. Whenever I have accidentally missed a payment, I call my biller to confirm they haven’t reported it any credit agencies.
If you do have late payments on your record, then you’ll just need to make sure you pay your bills on time going forward and wait for the older entries to be removed.
Have a high credit limit on your cards, but use very little of it! The best scenario would be to limit the number of credit cards you have (a good number is four maximum) and just make sure each of them has a high credit limit. Of course, ultimately, you just want to make sure you only use a small fraction of your credit limit, whether it is a high or low limit.
If you are maxing out your credit cards, then make sure you’re paying more than just the minimum payments and work towards freeing up your debt.
Start your credit history immediately! If you can get a credit card under your name now, then do it. Of course, use it responsibly per my last point. If you’re a parent of a child younger than 18 and you trust him/her to be responsible, then I recommend opening an account for them as a co-signer. This will give them a jumpstart at having a credit history. Though each year impacts their overall score minimally, it will add up.
There isn’t much you can do to improve this except wait for your points to slowly increase as your credit history ages.
Don’t just stick with credit cards! If you can afford it and are approved, get a mortgage or car loan. Don’t be too quick to pay it all off at once either, since the mix of credit types will help your credit score and this displays an ability to get and pay a variety of loans plus how responsible you are. Do your best to avoid the consumer finance loans though!
If you’ve only been relying on only one type of credit, then diversify. For example, if you’re used to buying your car with a single payment then it may be wise to go for a car loan with a reasonable rate instead. It’s bit counter-intuitive, but it may be worth it for those few extra points.
Limit the number of times you apply for a credit card. As I mentioned earlier, a good number of credit cards to have would be four (4). Anymore and you’re really hurting your score with these “hard inquiries”. Applying for a mortgage, having your employer check your credit, or even checking your own score/report are “soft inquiries” and will not hurt your score.
If you want to increase your score, then simply don’t apply for any new lines of credit that will require a hard inquiry. Hold off on applying for any new credit cards.
That’s it! Follow those five suggestions and you should be on your way to a higher credit score. Though it may not be easy. It’ll ultimately require a lot of discipline and responsibility on your part to make sure your credit score is good. Based on the FICO credit scale, a good score is between 660 to 720 points. It is said the median score in America is 723. How does your credit score compare?